Womack - Seeing the Whole - Mapping the Extended Value Stream

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The Lean Enterprise Institute Cambridge, MA USA lean.org Version 1.1 February 2003

Womack

Value Stream

With gratitude to Dan Jones'scolleaguesat the Lean Enterprise ResearchCcnter, Cardiff L.lniversity, in particularNick Rich, Dave Brunt, Dave Simonsand MatthiasHolweg, who helped pioneerextended value-streammapping. And with further gratitude to our reviewers,editors and designers(who bear no responsibilityfor the remaining faults):JoseFerro, Bruce Henderson, Dave LaHore, Graham Loewy, Dave Logozzo, Bob Morgan, Guy Parsons,Atisa Sioshansi,Peter Tassi,Jeff liimmer, Helen Zak, Maria Elena Stophe1 and Thomas Skehan of OffPiste De sign. And with specialgratitude, as always,to John Shook.

@ Copyright 20OZThe Lean Enterprise Institute, Inc. Onc Cambridge Center, Cambridgc, NIA02142 N{A tlSA Tel: 617-871 -2900 o F-ax:617 -87| -2999 . lean.org

ISBN 0-96678,+3-5-9 All rights rcserved. Design by Oi'f-PisteDesign, Inc. Printed in thc LISA May 2008

Whenever there is a product for a customer, there is a value stream. The challenge lies in seeing it. Mike Rother & John Shook, Learning to See

When you have learned to see value streams in individual facilities, it's time to see and then to optimize entire value streams, from raw materials to customer.

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FOREWORD When the first item in the Lean Tool Kit, Learning to See,was launched in June of 1998, we at LEI began to hear from managersin many industriesthat "this is rhe tool we have been looking for." Readersquickly realizedthat the grear power of Learning to Seelies in focusingattention on the value stream for inclividual product families within plants. Rather than concentratingon isolatedprocessesalong the value srreamor aggregatedactivities serving many value streams,readerscould suddenly see how to optimize the flow of each product from receiving to shipping. This insight was breathtakingfor many managers caught up in narrow techniques or looking at only one activity in a complex system. As more and more people heard aboutLearning to Seeand began to practicevalue srream mapping' we began to hear of additional needs. "How can we introduce continuous flow at the processlevel within facilities?"And, "How can we expand the scopeof value stream mapping beyond individual facilities to the extended value stream from raw materialsto the end customer?"Many readerssuspectedthat if there was vastmwda within the walls of each facility rhere was even more mwda between facilities and firms. We had been thinking about this issuelong beforeJune of 1998.Indeed, the initial ourline of Learning to Seedevoted equal attention to mapping the extended value srream.However. we knew that extended mapping is more challengingthan facility-levelmapping and we soon concludedthat we would need severalpublications.In addition, we realizedthat managers would do well to hone their skills by "learning to see" within a limited areabefore venrurins forth to "see the whole". We therefore included a diagram in Learning to Seeillustrating different levels of mapping. We've recently addressedthe processlevel with Mike Rother and Rick Harris' Creating Continuous Flow.In Seeingthe-Whole we tackle rhe higher, extended levels.

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Why is an extended map harder to draw? It's not becausethe fundamental concept is different. At every level of mapping, we are simply observingand writing down every step in information processingand physical transformationfor individual product families.We observethe flow of customer desiresmoving up the value stream,in the form of orders or schedules,and then observethe progressof products moving downstreamin responseto this information, from raw materialsto finished items. Extended mapping is harderbecausewe need to map acrossplant, divisional,and company boundaries.In addition,we must pay carefulattention to the variability in order and materials flows. Finally, we need to think about untangling, simplifying, and "right sizing" complex logisticsand informarion systems,large facilities,and high-scaleprocessingtechnologies servingmany value streamsand operated by many firms. Conducting extended mapping requires the cooperationof many departmentsand divisions within firms and between firms. These entities rarely think about the total flow of individual productsand ofren hide information from each other while pushing in opposite directions. In addition, extended mapping requires that line managersdevote hard-to-sparetime to direct observarionof each product family's value stream.Failing this, higher-levelmapping easilybecomesa staff exercise(or a consulting project) yielding only another report that's soon forgotten. These additional dimensionsof extended mapping truly are challenges.However, we have had considerablesuccessin overcomingthem, including recent instancesduring the prepararion of this workbook.We now are certainthat change-agentmanagerscan meet thesechallenges and we know that time alreadydevoted to learningto see at the processand the facility levels will prove invaluableas you expand your field of view. As with Learning to See,we hope usersof Seeingthe'Whole will tell us how to improve this tool and will be willing to sharetheir experienceswith the lean community. Numerous user suggestions,basedon hands-onexperiencewith value stream mapping at the facility level, have permitted us to improve Learning to Seeseveraltimes since its first publication. We look forward ro an intense and continuing dialoguewith the lean community on Seeing the'Whole as well. Pleasesend your comments and suggestionsta [email protected].

John Shook Senior Advisor, Lean Enterprise Institute Ann Arbor, MI, USA

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CONTENTS Foreword

by John

Introduction:

Shook Your Focal Plane

Changing

Part l:

Getting

Started

Part ll:

The Gurrent State Map

Part lll: What Makes

an Extended

Part lV:

Future

State 1

Part V:

Future

State 2

Part Vl:

The ldeal

Part Vll: Achieving

Value Stream Lean?

State Future

States

Gonclusion

About

the Authors

Appendix

Value

Strearn

Appendix

Facility-Level

Appendix

Facility-Lewel

lcons Gurrent Stite Maps Future State Maps Mapping

INTRODUCTION Ghanging

Your Focal Plane

For yearsnow we have loved to "take a walk" along the entire value stream for a given product, looking for value and waste.We've done chis for dozensof products in many industriesand followed streamsacrossthe world. We presentedour first example in Lean Thinking (1996)when we drew the path of a humble cola can. This simple product with only three parts (barrel,top, and "pop-top") traveled 319 days through nine facilities owned by six companiesin four countriesto progress from ore in the ground into the hands of the customer.Yet during this long march only three hours of value creating activities were performed and the great majority of the steps- storing,picking, packing, shipping, unpacking, binning, checking, reworking,and endlessmovementsof informationto managethe system'scomplexity - createdno value at all. Looking at the whole has alwaysseemed natural to us and doing so will always suggestways to slashcostswhile dramaticallyimproving responsiveness and qualiry. Yet most managerswe have encounteredon our value streamwalks want to stand in one place and look at only one point - their machine,their department,their plant, their firm. Often, the machine, the department, the plant, and the firm are performing well on traditional measures- high labor and machine utilization, low defects,on-time shipments-

and the managersare pleasedwich their achievements.

However, when we get managersto change their focal plane from their assetsand their organizationto look at the product itself and what is actually happening on its long journey, they immediately realizethat the performanceof the entire value stream is abysmallysub-optimal.Indeed, most wonder how they have worked for years in traditionally compartmentalizedoperationsand somehow failed to notice the waste everywhere.Then they wonder what they can do about the mess.

And that is the big challenge.Managersfind it easyand fun ro draw extended current state maps.And this is a critical first step becauseit raisesconsciousness. But providing a managementtool that permits the waste to be removed permanently by achievingsuccessivefuture stateshas been much harder.It was only when we first saw Mike Rother and John Shook drawing future sratevalue srreammaps ar the facility level and coupling these maps to an action plan for implementation that we begin to see how we might guide groups of managersfor all extended value streamsare sharedacrossmany departmentsand firms -

toward similar results

for entire streams. In this breakthroughguide we presenrour method. It proposesa progression through two "future states" to an "ideal state" after the current state is jointly identified and agreed.The first future state will be relatively easyand createsrhe setting for the second.The secondfuture state is considerablyharder and reaching the ideal statewill require a major commitment by all the firms touching the product. Yet we believe that the savingsin time and effort and the improvements in qualiry at every step will encouragereams to keep going once they learn how to jointly optimize the sharedstream. Eventually,with some creativethinking about processand information technologies, we believe that most value streamscan be compressedand smoothed to a point where a large fraction of the original steps and practicallyall of the throughput time are eliminated.This will be a true revolution and the value streamteam getting there first will have an overwhelming competitive advantage.More important in most cases,the team getting started first and making the quickest progressalong the path will have a continuing comperitive advantage. The key is to summon your courage,form your cross-departmentand cross-company team, and changeyour focal plane to focus on the product. Then learn to see rhe whole and ... get going to take out the waste!We will be urgingyou on and waiting to hear about your problemsand successes.

Dan Jonesand Jim Womack Ross-on-Wye,Herefordshire,L.lK and Brookline, MA, USA March 2002

What is Extended

Value Stream Mapping?

An extended vah-restreamis simply all of the actions- both value-creatingand wasteful- required to bring a product from raw materialsinto the arms of the customer.T'he relevantactionsto be mapped consistof two flows: (a) orderstravcling upstreamfrom the customer(clrfrom the salesdepartmentwhen forecastssubstitute for confirmed orders)and (b) productscoming down the value streamfrom raw materials to cLrstomer. Tbgethertheseconstitutea closedcircuit clf demand and response. Value stredm mapping is the simple process of directly obseruing the flows of information and materials as they now occLtr,summarizing them uisually, and then enuisioning a future state with mwch better performance. Maps of the extendedvalue streamcan be drawn fcrrproductscurrently in production 'I'he or for future products being planned. only difference is that the "current state" map for a product in productionshowsconditionsas thcy cxist today while thc "current state" map for a ncw product shclwsthe "businessas usual" approachto makingthe productcomparedwith alternative"future states"and "ideal states" with lesswasteand greaterresponsiveness.

Se l ecti n g

a P ro d u ct

Family

The whole point of value streammapping is to disaggregate operationalissuesro the level of specific products,where they can be more easily acted on by managcrs. Tir do this you need to start at the furthest point downstream(toward the customer) to be mapped and to dcfine product families at that point. Typically a product family will includea groupof productvariantspassingthrough similarprocessingstcpsand usingcommon equipmentjust prior to shipmentto the customer.F-orexample: o In a power tools business,a product family might be medium-sizcdelectric drills utilizing a common chassisand passingthrough a common assemblycell as the last manufacturingstep,evcn though the finished product has many different fcaturesand customerlabels.Alternativelvthe mapping team might define the product family as the motor going into the medium drills and map back upstreamfrom that point. o In the auto industry,a product family might be a car platform (e.g.,Ford Explorer and lVlercuryN4ountaineer)produced in an assemblyplant. Alternatively it might - ls1'ssay an nllglnxgelbe a major componentsuppliedto auto assemblers using a common designarchitectureand assembledin a cell, but with varying power outputs and with different attachment points for different vehicles.

PARTI: GETTINGSTARTED

. In the aerospaceindustry,a product family might be an entire airframe (e.g.,the Boeing 737 or Airbus A320).Alternatively,it might be a major subassembly,for example the vertical tail. The sub-assemblymay have many variantsfor different buyers of the completed aircraft.F or example the tail structure might incorporatedifferent aerialsand fairings for navigationand communicationequipment.And the productswithin rhe family chosenfor mapping might differ slightly in dimensions.For example,the basicrail designmight be slightly longer for use on a srretchedairframe.However, the verticaltail clearlyconstitutesa product family becauseall variants follow the samemanufacturingpath and have no commonalitywith tails for other aircraft,even if they are made in other areasof the samefacilities by the samefirm utilizing partsfrom the samesuppliers. Note rhat the sameproduct family may be supplied to a number of different end customersand have cosmeticdifferencescausingthe casualobserverto overlook product commonaliry.Neverthelessfrom the standpointof the firm or facility at the downsrreamend of rhe map, the product is clearly a family. Note also from the chart below that firms along similar value streamsoften have complex relationswith eachother. Delta suppliessimilar componentsto both Summa and Zenith; Omega fabricatessimilar parts for Delta and Azimuth; and Illinois Steel suppliesmaterialsto Theta and Zeta as well as Omega. Extended mapping cuts through this clutcer to focus on jusr one streamin order to think of improvementsthar can eventually apply to all streams.

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Becausethe product family is defined from the vantagepoint of the final srep mapped, the conceptis essentially"fractal".That is, you can define product families from many starting points and map backwardup value streamsof varying lengths.For example,whar appearsro be a product family for an armaturemanufacturer(largearmaturesfor alternators)is simply one of many component parts for an alternatorproducer (who might define a product family as largealternators).And the largealternatoris just one component among many from the standpointof the auto assemblerwho defines product families in terms of vehicle platforms. As you selectyour start point and move back upstream,it is best for your first map to follow the path of a single family and a single component in the product. This is becausethe first obiectiue of extended mapping is to achieue a breakthrougb in shared consciousnessof waste and to identify systematicopportwnitiesfor eliminating the waste.It is highly likely that the wastesidentified by following one component back upstreamwill occur in roughlv equal measurein every componentgoing into the finished product.The alternativeapproach of mapping the value stream of every component going into the product is time consuming and costly and we have found that it overwhelms managerswith too much data. In subsequentrounds of mapping -

if the collaboratorsin the mapping processfind ways to work together and achieve useful results- additional maps can be createdfor many or all of the componentsand parts going into a finished product. But to ger srarred,keep it simple and focus first on achieving a breakthroughin raisingyour team's consciousness!


D e t e r mi n i n g

a Ma n a g eable

Field of Vievv

The ideal map would truly show the whole. 1'hat is, it would srartwith rhe end cusromer who usesor consumesthe product.The map would then follow the product all the way up the value streamto moleculesin the ground (or in the rccyclingbin), showingall thc wasted actionsand information lossen route. However, just as trying to map all of a product'sparts back upstream is overwhelming, trying to see roo far with your current vision may be fruitless. We advisc novice mappersthat a lor can be learncd by looking one or two facilities and firms upstrcam from wherever you start.This is the minimum s c o p eo f c x t e n d c dm r p p i n g .

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Even at this minimum scope,note that thc scaleof mapschangesdramaticallybetween Learning to See(facility-level maps) and Seeingthe Whole. The facility boxes that are the primary units of analysisin this breakthroughguide are the samesizeas the individual process boxes("stamping", "welding", "assembly")in Learning to See.Vastexpansesof people and equipment within facilitieshave been shrunk into tiny boxes so we can see the big picture! In this guide, we will draw mapswith an intermediatefield of view, startingat the distribution centerfor the completedproduct and proceedingupstreamto raw materials(e.g.,rolls of steel). For thosc with more ambition and with full cooperationfrom upstreamfacilities and firms, it is both possibleand desirableto startnear the end customerand work far back upstream toward raw matcrials.

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Choosingt a Leader and a Value Strearn Team We hope that you are experiencedwith facility-level mapping as describerl in Learning to Seeand have appointed value stream managersfor all of the value streamswithin your facilities.We are convinced that this is critical to gain the full benefit of mapping at the facility level. What's more, the knowledge of facility-level value stream managers will be invaluable for quickly drawing accuratemaps of the extended value srream. However,by their nature,extended maps crossfacilitiesand firms. Supposemanagersare in place for the segmentsof the stream within each facility. Who has the responsibility for directly managingthe total stream acrossfirms, to connect the maps and lead the improvement process?The reality in most caseswill be "no one". So there is a need for a new type of managerwho we will call the "Product Line Manager" (pLM).

The Product Line Manager This individual in the most downstreamfirm needs to be much more rhan a technician concernedwith one facility. Indeed, for optimal resultsthe Product Line Manager needs ::::,rr:::,r',rp:i.

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to be a businessmanager.This means"business"in the senseof taking responsibility for making money and growing market sharewith the product family in question.And it means "manager" in the senseof looking concretelyat the preciseactionsthat need to be taken all along the value stream to remove wasre and cost while improving quality and responsiveness. The most successfulfirms we have encounteredusing these techniques have Procluct Line Managerswho think about product marketing and engineeringas well as production and purchasing.With all the elementsof marketing,design,producrion,and supply chain under his or her oversight,this individual is in a unique position to judge the performance of the many functions touching the product. Indeed, as we will see in a moment, a continuing assessmentof functional performancealong with preciseprescriptionsfor improvement is one of the most important benefits of product line management. However, we do not usually recommend what is sometimescalled a "product team" structure in which all of the engineering,operarions,purchasing,and marketing employeessupporting the product are put on a dedicated team. Doing this causesa large amount of organizationaldisruption during the transition and this structure still does not addressthe behavior of upstreampartner firms. Whai's more, it is really not necessaryin most casesif the P[,M takes an energeticapproachto the job.

Perhapsche best known example of what we are talking about in the manufacturingworld today is the Chief Engineer for a car platform at Toyota (a job position also called the shusa).This individual is widely known by everyone in the company and takes responsibility for the successof the product in terms of return on investment and market share.Yet the Chief Engineer,like our proposedPLM, actually has no direct authority over marketing (which is done by a large marketing department),over engineering(which is done by the variousparts of the large engineeringdepartment),over production (which is done by the operationsdepartment),and over suppliers (who are managedby the purchasingdepartment,and the production controland logisticsdepartment.)Insteadthe Chief Engineer,working with a tiny group of assistants,is the one person who can "see the whole" and think about the necessarycontributions from every functional activity and every upstream firm to createand deliver a successfulproduct as judged by the end cusromer. The PLM in the most downstreamfirm will be even more effective if there are similar individuals in each of the upsrreamfirms so that for any product a quick evaluationcan be conducted by a small group composedof one PLM per firm. But this is not likely to be the case.Indeed, in today'sworld very few firms have true PLMs. (One of our concernsin preparingrhis breakthroughguide has been that the very managersmosr able ro benefit from it don't currently exist in many firms!) Thus to get started,someonefrom one of the functional areasin the most downstreamfirm will probably need ro take the lead and aim to achieve a breakthroughin consciousness. This individual probably will have little formal authority for overseeingrhe value stream and will therefore need to lead by example and by raising hopes about possiblejoint gains. We can't guaranteethat anyone anl.wherealong a value stream can succeedin raisingevery participant'sconsciousness to transformthe entire stream.We can guaranteethat anyone anywherecan raisethe important issuesand make construcrivechangea possibilitywhere ir was previously impossible ... if they have the courageto acr.

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To be successful,the mapping leader needs to be someonewho can gain the respect of upstreampartnersby conductinga rigorousand fair process.Logical candidatesare from purchasing,production control, logistics,operations,or a processimprovement function like quality or processengineering.Any of these can work. However, assigninga buyer from purchasingto be a mapping leader can lead to problems if upstream participantsbelieve that the real purpose of mapping will be to uncover 'Ihus waste at suppliers,followed by demands for immediate price reductions. a purchasingfunction will probablyneed to assignmapping leadershipto someone from its supplier development group if all participantsare to be convinced that the processis fair, balanced,and aimed at win-win-win outcomes. The value streamteam needs to include representativesof all the firms and facilities that shareownership and managementof the stream.Ideally, it would also include the relevant departmentswithin each firm - sales,operations,production control and logistics,purchasing,manufacturingengineering,informationmanagement,and product engineering.However, this can make the team too large to walk the value 'fhus streamtogether,which is often a critical learningexperience. we generally recommenda small team with a minimum of one representativeper company. The team can query the functions supporting the value stream as necessaryto fill in missing information.

The Wrong

Role for Consultants

and $taffs

A n u n d e r s t a n d a b lien c l i n a t i o ni n a n y f i r m w i t h b u s y l i n e m a n a g e r s -and this surely includespracticallyall firms-is to delegatethe task of creatingvalue stream maps to outside consultantsor to internalstaff groups,typically in operationsplanning or process improvementdepartments.However,in our experiencethis is misguided.The findings of the consultantor staff expert are rarely credibleto the managerswho need to take action and the consciousnessraisingexperienceof walking the value stream together-discovering the waste and jointly agreeingto a crossfirm action plan-simply never happens.A beautifulreport is produced by the consultantor staff team-and in our experience the beauty and precisionof the maps is generallyinversely proportionalto their usefulness-but the findings are then fildd away and soon forgotten. Remember:Only managerstaking clear responsibilitycan fix the mess. So the same managersought to draw the maps.

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Once designated,the leaderand the team need to take a walk together along the value stream,draw the current statemap, and then ask, "Which stepscreatevalue?,Which stepsare waste?,Why is order flow so erratic?, Why is quality so erratic?,Why are deliveriesso erratic?,How can value be enhancedfor the end-customer?" Once the map is drawn so that the current state of an existing value stream is known precisely,it's time to createthe first of two "future state" maps that remove wasted stepswhile stabilizingprocessesand simplifying information flows. Future State 1 achievesthe luture state shown in Learning to Seewithin each facility touching the product. This means introducing continuous flow (as describedin Creating ContinwowsFlow) wherever possibleand instituting smooth, leveled pull between the areasof continuous flow. Future State 2 then introducessmooth, leveled pull with frequent replenishmentloops between every facility touching the product. In the process,most warehousesare eliminated, or converted to crossdock operations. An Ideal State may then co-locate at one site all of the activities required to proceedfrom raw materialsto finished goods,in the processeliminatingpractically all transportlinks and needs for information management. You may or may not find this particularsequence appropriatefor your own value streams.In particular,if you are mapping a new value stream for an entirely new product you will probably want to skip directly from the current (businessas-usual)state to an ideal state.We follow the three-step.sequence, beginning with Future State 1, in this breakthroughguide because we believethat this is likely to be the most typical approach.


Tvvo A

Final

Diagnostic

Benefits for

Functions

As teamsdraw their current statevalue streammaps,they are likely to make a surprising discovery.Most problems identified along the value srreamwill trace direcrly to the performanceof variousfunctions - information technology,production control, logistics, product engineering,operations,purchasing.What's more, weaknessesin functional performancediscoveredin the sample value streamwill almost certainly be present in every other value stream the firms touch. In our experience,the functions want to support the value stream for each product. But they have a hard time seeing the connection between their activities and the needs of the product. Thus an important benefit of the mapping processin addition to a breakthrough in consciousness about the magnitude of waste and the enormousopportunities for improvement - can be to give much clearerguidance to each function about its role in supporting value streams.A real bonus can be achieuedif the improued functional performance can then be applied to all ualue stredms within the participating firms.

A

Diagnostic for Relations Betrrueen Firms As teams start mapping, they are likely to make yet another discovery.Today we all use languagestressingpartnershipand cooperationbetween firms sharingvalue srreams. However, mapping teams in most caseswill discoveran enormousgap between these high-level principles of collaborationand the day-to-dayreality down ar the level of each value stream.If the value stream map showswidespreadconfusion and counterproductive actionsbetween firms at the value stream level, it will be obvious that "partnership" at the top isn't translatinginto competitivenessat the bottom. Fortunately,value stream mapping provides a clear and consistentlanguagefor firms to start an intelligent conversationwith each other about the root causesof their shared cost, quality, reliability, responsiveness, and communicationsproblems.(Indeed, we believe a relentless,fine-grainedfocus on improving each value srream,rather than high-level agreementon principles, is what has given Toyota its edge in creating the world's leanestsupply base.)A real bonus can be achieuedif the practical lessonsof sbared ualue stream management can then be applied by each'firm to its relations with its other customers and swppliers.

The Current

State Map

With the basic principles of extended mapping in hand, it's time to accompanya value streamteam creating a map of the current state for a specific product family. This map will characterizethe value stream as it is today. We've chosento focus on a high-volumeautomotivecomponentoffered with a small number of options- a windshield wiper consistingof a blade holding the actualwiping edge and the arm attachingthe blade to the vehicle. This product is similar in complexity and variery to the steeringcolumn bracket used to illustrate Learning to See. We've decided to map only an intermediate portion of a total value srream,which runs its entirety from the end user (you in your car) at the downsrreamend to raw marerials(iron ore in the earth) at the upstream end. The portion we will map srartsat Alpha Morors, rhe final assemblerof the finished vehicle, toward the customer end of the value stream.We then proceedback up the streamthrough che facilitiesof Beta Wipers and Gamma Stamping to the shipping dock at Michigan Steel, a raw materialsservicecenter.The five-member team, from the four firms sharingthis portion of the value stream,will be led by the head of supplierdevelopmentin the purchasingdepartmentat Alpha Motors and includesrhe product line managerand the assemblyplant managerat Beta Wipers,the value streammanagerfor this product family at Gamma Stamping, and the salesmanagerat Michigan Steel.

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brackets

stiffenerand wiping edge

windshield A. B. G' D. E.

wiper

Assembly

and Fabrication

Rolled steel stamped into blade spine Four brackets attached to blade spine Wiping edge attached to blade spine and brackets assembly Blade assembly attached to arm Assembled wiper attached to automobile

Steps

path

Before we start mapping, let's look at an exploded view of this product showing the parts going into the wiper and its fit-point on the end product. Note that we will only map the circled areain this initial map. This is to keep the map simple and to concentrateinitially on raisingeveryone'sconsciousness of the extended value stream.

T

.---

arm components


13

our windshield wiper comesin two specifications- high trim and standard (HT and sr) - and in two sizes- small and large (s and L) to fit two different vehicles (A and B). The right-hand and left-hand wipers are identical on the vehicles in this example.The trim levels differ only in the paint - a matte-black finish for the standardtrim vehiclesand a glossy-blackfinish for the high trim models.The designsfor the two models differ only in the size of rhe parrs,not in their number or basic design.This means that the wipers are inrerchangeablefrom a final assemblystandpoint becausethey use the same fit points and require the same installationtime. The wipers clearly form a product family becauseall of the actionsoccurringupstream- component assembly, painting, and stamping - are in the same processsequencein the same firms and use the same processingequipment with a few tool and fixture changes. with the product family clearly identified, the first step for the team is to "take a walk" along the entire length of the value srreamto be mapped, recordingthe facilitiesvisited, the transportlinks, every action performed on the product' all information managementactions,and the time required. we alwayssuggesrstarting at che customer end becausethe customeris the point - indeed, the only point - of these materialflows. No product should be advancingthat the customer doesn't wanr and nothing should be happeningthat rhe cusromerdoesn'rconsiderof value! For the wiper example, the list of actionson the product is shown in the following list. Note rhat we have numbered all of the steps (73) in the left hand margin of the list and comparedthese with value creating steps (8) in the first column on the right. We have also recordedthe total elapsedtime (total product cycle time) which sums the time required to conducr all of the srepson a product (44.3 days) and compared this time with the actualvalue crearingtime (54.7minures),which is the sum of only the value creating steps.

Ph y s ica l Total

A cti o n s

R e q uir ed

to Gr eate

a W indshield

Value Creating Steps

Steps

Total Time

Raw Materials Supplier: Michigan Steel, Dearborn Heights, Ml 1. Load coils for twice weekly direct ship

10m

Transport Link 1 2. Directship (truck),Tonawanda,NY (500 miles)

8h

Second-TierSupplier: Gamma Stamping, Tonawanda, New York 3 . U n l o a dc o i l s 4. Receive& create ticket 5. Store coils 6. Conveycoil to Stamping Press1 7 . M o u n t o n c o i l r o l l e ra n d f e e d p r e s s 8 . S t a m p i n i t i a l( f l a t )s h a p e 9. Accumulatestamped parts during run 10.Convey parts bin to storage 1 1 .S t o r e p a r t s 12.Convey parts in bin to Stamping Press#2 13. Load parts in magazine,auto feed to press 1 4 .S t a m pf i n a l ( c u r v e d )s h a p e 1 5 .A c c u m u l a t ep a r t sd u r i n g r u n 16. Convey parts to storagearea 17. Store parts 18. Convey parts to paint shop 19. Rackparts on moving conveyor,clean, d i p , p a i n t& b a k e 20. Remove parts,inspect,sort & accumulatein bin 21. Convey parts to storage 22. Store parts prior to shipment 23. Load parts for twice weekly direct ship Transport Link 2 24. Directship (truck)to Harlingen,TX (1500 First-I'ierSupplier Warehouse: First-lrer

Har,insen. rX T:tH,ffis, 26.Formallyreceive 27. Store Parts

10m 10m 14d 10m 5m 1s 4h 10m 48h 10m 10m 10s 4h 10m 48h 10m 130m

Sl*wt(. .,;Kar-.

\?

. cnr$)lo'" D - ' ' n '' i !

28. Retrieveand load truck for daily direct ship

1s

10s

52m

96h

b

/r"gqo;.f..1*$ V\F'

Value Create Time

2h 10m 48h 10m

ols-Slrfi

/rq$'

W iper

10m 10m 48h 10m


15

Total

Steps

Value Creating Steps

Total Time

Transport Link 3 29. Directship (truck)to Reynosa,Mexico ( 1 0 0m i l e sw i t h q u e u e a t b o r d e rc h e c kp o i n t )

6h

First'lier Supplier Assembly Plant: Beta Wipers, Reynosa,Mexico 30. Formally receiveand move to storagearea 31. Store in receivingstoragearea 32. Conveyfrom storageareato first assemblystep 33. Store at first assemblystep 34. Insertfastenerclip and securewith pin 35. Accumulateparts in first assemblystep 36. Convey parts to second assemblystep 37. Store at second assemblystep 3 8 . C l a s pw i p e r b l a d ea s s e m b l yt o s u b a s s e m b l i e s 39. Accumulateparts in second assemblystep 40. Convey parts to third assemblystep 41. Store at third assemblystep 4 2 . I n s e r tw i p i n g e d g e i n b l a d ea s s e m b l y 43. Accumulateparts from third assemblystep 44. Convey parts to inspection,test & pack step 45. Store parts at inspection& test 46. Conductinspection,test & pack in protectivesleeve 47. Accumulateparts at pack 48. Convey parts to shipping dock 49. Store awaiting shipment 50. Load truck for daily direct ship

10m 48h 10m 8h 10s 4h 10m 8h 10s 4h 10m Bh 10s 4h 10m 8h 20s 4h 10m 12h 10m

Transport Link 4 5 1 . S h i p b y t r u c kt o H a r l i n g e nT, X ( 1 0 0m i l e sw i t h q u e u e a t b o r d e rc h e c kp o i n t )

6h

First-TierSupplier Cross-Dock: Beta Wipers, Harlingen,TX 5 2 . U n l o a dt r u c k 53. Cross-Dock 54. Store awaiting full truck 5 5 . R e l o a dt r u c k f o r d a i l y s h i p Transport Link 5 56. Ship via multi-pick-uproute (truck)El Paso,TX { 6 0 0m i l e s )

Value Create Time

10m 10m 12h 1Om l

96h

10s

10s

10s

Total

Value Greating Steps

Steps

Car Company Cross-Dock: Alpha Motors, El Paso,TX 5 7 . U n l o a dt r u c k 58. Cross-Dock 59. Store awaitingfull truck 6 0 . R e l o a dt r u c kf o r d a i l y d i r e c ts h i p

Total Time

Value Create Time

10m 10m 12h 10m

Transport Link 6 61. Directship to West Orange,NJ by truck ( 2 0 0 0m i l e s )

96h

Car Company's State Street Assembly Plant: Alpha Motors, West Orange, NJ 62. Formallyreceive 63. Conveyto storagearea 64. Store awaiting need 65. Conveyto kitting area 66. Transferto assemblybins 67. Store in assemblybins awaiting need 6 8 .A s s e m b l ew i p e r b l a d ei n h o l d e rt o a r m 69. Attach wiper arm with blade to vehicle 70, Line off vehicle and test 7 1 . S t o r ef i n i s h e dv e h i c l e s 72. Load train for daily direct ship

10m 10m 48h 10m 10m 2h 1m 1m 10m 12h 2h

Transport Link 7 7 3 . S h i p t o C l e v e l a n dD i s t r i b u t i o nC e n t e rb y t r a i n ( 5 0 0m i l e s )

1m 1m

12h

Summar1y of Physical Actions Total Steps

Time

Distance

73 44.3Days

Value Greating

I 54.7 Min.

53OO Miles overT TraneportLinke


17

L e a rn i n g

to S e e V alue

As we write down the actions,the ability to distinguish value-creatingsrepsfrom currently necessarybut wasteful steps and value-creatingtime from currently necessarybut wasted time is critically important. The enormousgap between total time and value-creatingtime and between total actionsand value-creatingactions is the opportunity the value stream team must seize. Given the importanceof telling the difference between value and waste, it is not surprisingthat we often encounter readersand audienceswho are anxious about their ability to categorizeactionscorrectly.Actually, it is very simple. Put yourself in the position of the consumerand ask if you would pay less for the producr or be lesssatisfiedwith it if a given step and irs necessarytime were left out. In the caseof attachingthe wipers to the vehicle in the Alpha assemblyplant, the answeris clear.Consumersdo not expect to receive their vehicles with the wipers in the front seat,accompaniedby a polite note stating, "Some assemblyrequired". The final attachment step clearly createsvalue for the customer.So do the seven actionsof stampingthe metal arms,painting them, and sub-assembling them prior to attachment on the vehicle. By contrast,look at the many movementsof the product within each plant between processsteps,the long transportlinks between plants, the warehousingand crossdocking activities along the value stream,the numerous testing and inspection steps,and the repeatedpacking and unpacking of the product. Would you, as a consumer'be less satisfiedwith your vehicle if these currently necessaryactivities could somehow be left out? Of coursenor. And would you be happier if the car company could get you the model you want with the trim level you wanr quicker becausethese steps were left out? Of courseyou would. Indeed, the more these stepscausea delay in receiving exactly the product you want, the lessyou probably are willing to pay for it. Far from creatingvalue, these shipping, packing, inspecting, and warehousingactionsactually destroy it!

D r avvi n g

a U se fu l

Map

The long list of steps,categorizedby waste and value, is highly provocarivebecause it helps the team realizethe enormousopporrunity for savings.. What's more, rhe ratiosof value-creatingtime to total time (54.7 minutes out of 6S,792or 0.08%) and of value-creatingstepsto total steps(8 out of 73 or ll%) and the amount of transport distance(5300 miles) are quite typical for discretemanufacruredproducts in the world today.Our example is the norm, not the exception,and similar ratios are likely to emerge from any maps you draw.

18

First Vievv of the Gurrent Showing the Gustorner

State

Map -zLzL-1

Atpha I I Dietribution Center I

I I I

Cleveland,OH

ar6oEi--] 640^ |

| | | | |

4265r 214Hr 32ob 213er 1o7Hr

|

I I I I I

However, for this information to be useful we need to simplify it and put it in a form managerscan act on. The best way to do this is to group and summarize the data by each of the facilities and transportlinks the product encounters.Again, the place ro starr is with the customer,at the most downstreamend of the map. In this case,the customer is the Alpha Motors Distribution Center, which interactswith car dealersto get end consumers the products they want. We'll representthis organizationwith a facility icon placed on rhe right side of the map. Underneath this icon we'll draw a databox recordingthe customer requirement for size and frequency of shipmenr. Note that this facility is a cross-dockingoperationwhere vehiclesare sorted and sent onward as quickly as possible to several regional storageareasacrossNorth America. From there they go to auto retailersand then into the hands of the customer.Thus our intermediate-viewmap stops considerablyshort of the total value stream map thar ir may be useful to draw at some point in the future.


19

a-L-14 lVichiganSteetl

ferviceco. I DearbornHeights,

4--14 Gamma

I

I

stampins I I fonawanda,NY

lbetaWipers I I WarehouseI

lrr

|.t

I

l

Harlingen,TX

I betaWipereI Agsembty I I Reynosa,Mexico

To get from raw materialsto the Alpha Distribution Center, the procluctflows through seven assembly,fabrication,warehousing,and cross-dockfacilities.These are: o Alpha Motors' State street Assembly Plant in west orange, New Jersey o Alpha Motors' Cross-Dock,for many componentsfrom many suppliers, in El Paso,'Ibxas o Beta Wipers' Cross-Dock,for parts sent from severalplanrs ro many customers, in Harlingen, Texas o Beta Wipers' ComponentAssemblyPlant in Reynosa,Mexico o Beta Wipers' PartsWarehousein Harlingen, Texas o Gamma stamping's stamping and Painting plant in Tonawanda, New york o Michigan Steel'sServiceCenter in Dearborn Heights, Michiean

Gurrent

State

Map

Shovving

All Facilities

ZLzL-1

| ,"llr,lf""^ | Center I

I

Cleveland,OH

1160| orv

I

| | |

I I I

640A 426er 214Hr

I zzoo I 213er

| |

rc7Hr

I I

I betaWipers I I Cross-Oock I

-=

lhl +l I Harlingen,fX

El?aeo,TX

West Orange,NJ

We have createdtwo new facility icons not seen in Learning to See.One is a cross-dock icon for facilitieswhere productsare not stored but instead moved immediately from an incoming vehicle to an outbound shipping lane. The other is a warehouse icon for facilities where incoming goods are sorted and stored before shipment to their next point of use. (The iconsused in this workbook are displayedon the inside back coverand explainedin Appendix A.) You may want or need to createother icons,of course,in particularfor activitiesnot encounteredin our example.Just make sure that everyonc working on the extended map Llsesthe same icons.


21

trn;Ww;1

I I

ll

Gamma I stampins I

Tonawanda,NY

I Warehciuee I

In

Harlingen,TX

t--RMaa6r'.-l wrPl1o h.

I I

FG O\.

I I

tathrrb"-l I s;"v.I E?E=ro"vt.] -1

Dd".t a-=2oooppm |

I

I

I oetaWipersI Assembty I I Reynosa,Mexico RM56 h. wtP41h. FG12h

2Shifts 5Oavs E?E = 1 Dav Defects = 4OO ppm

You will soon discoverthat you can't successfullygather and summarizerhe informarion needed for improving the value stream without drawing detailed currenr state in-facility value stream maps for products as they move through manufacruringfacilities.This is why masteryof the material in Learning to Seeis a prerequisitefor macro-mapping. We've drawn current scatefacility-level maps for the three manufacturingfacilitiesalong this value stream- Gamma Stamping, Beta Wipers Assembly,and Alpha Motors Assembly -

in Appendix B of this workbook, and you'll want to append yorir facility-level maps ro your current state macro map as well. Note that the data box under each facility contains data on inventories (Raw Materials,Work-In-Progress,Finished Goods),rhe amount of productive time (the number of shifts per day and the number of working days per week), the frequency of the production cycle (showing how ofren every part is made, such as

Current State Map and Data Boxes

Shovving

All

Facilities /L-L-1

| ,"il?,lf"", I Center I

I

Cleveland,OH

l%otD"v--] | | | | | |

640^ 42651 214Hr 32oB 2135f 1o7Hr

I oetawipersI I Cross-DockI | .'---+ a

lsl -l 1

Harlingen,TX

El?aso,TX

WeslOran6e,NJ RM50 h. wt?2h. FG14h. 2?hifts SDavs E?E=1Day Defects = 5P?^

"EPE = 1 Day" meaning "every part every day"), and the defect level (in parrs per million) as reported by the customer at the next downstreamfacility (or by the customer'sinspector at the point of shipment in the caseof the Alpha Morors Assembly Plant.) We have not drawn facility-levelmaps for the Alpha and Beta cross-docksand for the Beta partswarehouse.This is partly to keep the size of this guide manageableand alsobecausewe will endeavorto eliminate these facilities altogetheras we move through progressivefurure states.If your value streamswill require large distribution warehoutesin any imaginable future for example for serviceparts - or cross-docks,you should also draw maps of these facilitiesas a guide to improving their performance.Exactly which facilitiesmerit in-facility maps and in what detail will alwaysbe a matter of judgmenr, so be preparedto adjustyour approachas your experienceaccumulatesand you encounterdifferent siruations.


| | I I I I

T h e Ou a l i ty

S cre e n

As we look at the data in the facility boxes,we nore a trenclworthy of further crarnination. At Alpha Motors Assembly the defect rate for wipers installed on rhe vehicle - def'ects discoveredby a representative from Alpha'sDistribution Division in a final inspectionjust prior to shipment is 5 per million. (SinceAlpha is assembling250,000vehiclesper year with two wipers per vchiclc, this means that two to three wipers per ycar arc rejccted at final inspection,usually for scratchesin the finish.) Yer when we look at defects emerging from Beta Wipers Assembly (asjudgcd by Alpha), we note that there are 400 def'ccrsper million and when we look at defects emcrging from (]amma Stamping (asjudged bv Beta) we note that there are 2000 defectivc parts per million. F'inally,when wc look at defccts arriving ar Gamma from N,lichiganSteel the figure soarsro 10,000pcr million. In brief, clualityis worseat every step up the value stream,a common phenomenonin practicallyevery industrytoday.This meansthat to achieve5 clefectsper million (approaching the Six Sigmalevel of 3.4 dcfectsper million), the prodr,rct is flowing through a scriesof qualitv screensin each facility,cach of which resultsin scrapand inspectioncost.The slope of this clualitygradient can surely bc reduced in firturc sraresanclit is importanr to nore carefully the current slope to aid our thinking on how to do this. We therefore recommend drawinga Quality Screen(asshown below) on the (lurrent Statemap. In this casewe have placedthe diagramin a convenientspot in the rowerright-handcorner.

O.rrality

Screen

ppm defects

2000

r500

1000

500

0 MICHIGAN TO GAMMA

24

GAMMA TO BETA

BETA TO ALPHA

ALPHATO ALPHAPC

Mapping

the Transport

Links

'fhe

next step, oncc the facilitv-level maps are drawn and the data have been summarized, in facility boxes,is to add the transportlinks between the facilities.Tb do this, you may need boat, train, and airplane icons,in addition to the truck icon frctmLearning to See. In this example,we will use the airplaneicon with a dotted line for shipmentsexpedited by air and a truck icon with the same stylc of dotted line fr-rrthose expedited by truck. Thc

numbersin the regularshippingicon (a truck or a train) show the fiequency of shipments (e.g.,"1 x day" : on€ shipmcnt per day) while the number in the expeditingicon shorvs the number of costlyexpeditedshipmentsin the past year (e.g.,"2 x year" : rwicc a year). With these data in hand, we are ready to complete the physicalflow portion of the map Lry drawing in the normal product flows between facilities, using broad arrows.Notc that thcse arc striped,"push" arrowsbecauscproductsare mclvingaheadat thc commandof a centralized informationsystemand not necessarilyin accordwith the immediateneedsof the next downstreamfacility.l.lnder eachof the transportlinks we recordthe distancein milcs, the shippingbatch sizc,and the percentageof defectivedelivericsas reportedbv thc cusromcr. As thcse flows are drarvn,the team shoLrldnotc one additionalpoint -

the trcnd in def'ectiveshipments:latc, early,or incorrect(the wrong product or in the wrong amount). As is alscltypical in most industriestoday,we note that the furthcr up the value streama facility is, the morc likely it is to make defectiveshipments.This situarionis analogousto the quality gradientand equallyworthy of improvementin future sraresbecauseever_v defectiveshipmcnt generatcscorrectioncostsdownstreamand perturbsthe schcdule.Fclr economyof spacewc have summarizedthis trend in the samebox as thc qLralitvdata on the Current Statemap, changingthe label to the "Quality and Delivery Screen".

O.ualitlz

and

Delirrerlz

lScreen

PPM DEFECTS 2000

% DEFECTIVE DELIVERIES

1500

10

1000

500

MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHA TO ALPHA PC PARTII: THE CURRENTSTATEMAP

The

"Bottom

Line"

Finally, we can draw a time-and-stepsline along the bottom of the map. Note that the first figure above each segment of this line is the total rime within each facilitv and along each transportlink, while the figure in parentheses ro the right is the value creating time. The first number below each segment of the line showsthe total actions(steps)taken on the product in each facility and transportlink, with the value creating actionsshown to the right in parentheses. Note that information needed for each facility is contained in the .,steps,, .,Time,, and summary boxes at the ends of the time-and-stepsrines on the indivicluar facility maps.

-2LzL-1 luichisansieetl Sewiceco. I I DearbornHeights, Ml I

SteelCoits I

_N-

:\

.

l- 2"1_

o

.

lweekl I

u---*-

t\

ra;L laf"a"lal

r1,l

t.\

oooo.or>

4-/14 Gamma

I

I P,, l-l

I

stampins I I

-2LzL-1

U-T

3t"w4#+

rrrrrrr+

Tonawanda,NY

Reynosa,Mexicot....

1 a

RM336h. wrP110h. FG4Ah.

l - ' FRM f 56 h. wt? 41h. FG12h

35hifts 5Davs E?E=3Davs

z5ntftq

SDavs

E?E=1Dav Defects = 4OO ppm

Defec.ts

=zoooppm

o.3d.

o.25d. 20.6d.(3131e.) 22(3)

ril|Drv+

4.6 d. (3o s.) 21(3)

r^ ' o ' . . ,

Gurrent state shovving all Facilities, Transport Defects & Delivery, and Time-and-Steps Line

Links,

zz't-21--1

1

//

qfil

/r

//

l xDay

| ,"flr,l&,", I Center I I

Cleveland, OH

-1

,rooio^v 640^

| | | | | |

4265r 214Hr 32oB 2135r rc7Hr

| I I I I I

WeetOrange,NJ RM50 h. wt?2h. 2xYear

FGIAh

2Shitrs SDavs E?E = lDav Defects = Sppm

4.Od.

o.5d. 4

1

4.Od.

o.5d. 4

1

o.5d. 2.Od. (12os.)

1

11(2) Ouality

and

Delivery

Screen

.PPM DEFECTS defeds

2000

70 OEFECTIVE DELIVERIES

1500

10

1000

t ,r,',r?*'

s00

0 MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHATO AIPHA PC

M a p pi n g

th e

l n fo rma ti on

Flow

The tcam has now completcd mapping the physicalflow of the product but the valuc srream map is onlv half done. This is for the simple reasonthat if no clrstomcrsignalsa demand for products from upstream,then nothing will flow. Or at least nothing shor-rldflow! We thereforc need to go back to the upper right corner of our map and draw the flow of order and prroductioninformarion going back from rhe customcr. Howevcr, as we do this we nccd to warn you that mapping the information flow is the 'l'he hardestpart of the task. salcs,productioncontrol,and operationsgroupswithin most companiestend to communicatepoorly and a managerwho fLrllytrnderstandsrhe infrrrmation managementmethods of all thrcc groups is a rarity.Whcn you add the complexity of going acrossseveralcompaniesand through sales,productioncontrol,and operationsdeparrmenrs within eachcompany,it's not surprisingthat very feu, line managersseem to have useful knowledge of how infclrmationis managedon a macro-scalc. Cliven this rcality, vou shor"rldstart where ordersenter the sysremand follou' the ordcr flor,v fiom department to department and from information managementsystem to infbrmation managementsystem,first through the most downstreamfirm and then upstream through the supplierfirms. Bc sure to use a pencil as you skctch informationflows and kccp an eraserhandy! What's more, if you can, requcstthesedata aheadof your visit becausemany facilitiesand IT departmcntsdo not have them readilv at hand. To actuallydraw the informationportion of the extendcd map wc will need an additional icon for production control, which we have drawn in the shapeof a compurer rerminal.The first of these is for Alpha N,IotorsSalesOrder Bank. At this point orders are aggregatedand placed in inventory (shown by order queue icons along the information flows). Thcv are held trntil the weekly salesplanningmeeting that decidesthc specificarionof thc orders that should be relcasedinto the system,given orders in hand from dcalers.These ordcrs are then releasedupstream to the following firms and departments: o Alpha l\{otors HeadquartersProduction Control o Alpha N,fotorsAssembly Plant ProdLrctionControl o Alpha NlotorsAssembly Plant Ntlarerials Control o Beta Wipers Headcluarters ProductionControl . Bcta Wipers AssemblyPlant ProductionControl o Gamma StampingHeadquartersProductionControl r (iamma StampingPlant ProductionControl o Ntlichigan Steel ServiceProductionControl

2A

In almostall manufacturingcompanies,the salesand prclrlucticln control departmencsactually send a seriesof forecasts,schedules,and productionreleasesback upstream.For example, in the car industry a rhree-month forecasr,a one-month rolling schedule,a weekly fixed schedule,and a daily shipping releasemight be typical.For our purposes,the impolant informationis the weeklv fixed scheduleand the daily shippingreleasebecauserhese actually trigger production in facilities and shipmenrsbetween facilities.These arc the information flows wc will capture on this map. If we follow the weekly schcduleand write down the infrrrmationmanagemcntstepsand the time involvcd, as we did earlicr with physical actionspcrformed on the producr, we note the following alongthe longestpath. Information Manage the

Actions Currently Value Strearn

Required

to

Steps

Delays*

Production at Alpha Motors 1. Dealer Ordersqueue in the SalesOrder Bank

10 Davs

2. Tiansmit weekly ordersfrom Alpha SalesOrder Bank 3. Queue at Alpha HeadquartersProduction(lontrol

14 davs

4. Releasevl'eeklyproduction requiremcnts to Alpha plant 5. Queue at Alpha Plant ProductionControl 6. Releaseof daily productionsequence

6 davs

Production at Beta Wipers 7. Tiansmit weekly orders fiom Alpha HQ to Beta He B. Queue at Beta HQ ProductionControl

6 davs

9. Ttansmit weekly production requirementsto Bera plant 10. Queue at Bera Plant ProductionC
6 davs

12. Beta Plant issuesdaily ordcrsfrom Beta Warehouse 13. Alpha N'Iaterials control rransmirsdaily requiremenrsto Beta plant 14. Beta Plant ProductionControl issuesdailv shippingrelease Production at Gamma Stamping 15. Tiansmit weckly ordersfrom Bera HQ to Gamma He 16. Queue at Gamma HQ ProductionControl 17. Tiansmit weekly production requirementsto (iamma plarit

l,l davs

18. Queue at Gamma Plant ProductionControl 19. Releaseof weekly productionschedule

6 davs

20. Beta Nlatcrialstransmitsrwice-weeklyrequiremcnrsto Gamma planr 21. Gamma Plant Producti'n control issucstwice-weeklyshippingrelease * All transmissions areelectronic and essentially instantaneous.


Delivery from Michigan Steel 22- Transmit weekly ordersfrom Gamma He to Michigan Steel 23. Queue at Michigan Steel

14 days*

24' Gamma Materials conrrol transmirs twice-weekly requiremenm to Michigan Steel 25. Michigan Steel issuestwice-weekly shipping release Total number of steps Elapsedtime for an order from the first to the last step (alongthe longestinformation path) Actual processingtime (assuming eachMRprunsovernight)

25 steps 58 days 8 nights

* All transmissions areelectronic and essentially instantaneous.

The Value

of Information

Note that we have made no effort to categorizeinformation management steps as .,value creating" versus "wasteful", as we did for the list of physical steps. This is becausefrom the end customer'sstandpoint none of the information processing steps creacesany value. To test this - perhapsshocking - assertion,just ask yourself whether you would be less satisfiedwith a product if it could be ordered and delivered to you with no managemenr of production and logisticsinformation. Obviously you would not be less satisfied.Indeed, you would be more satisfiedif the cost savingsfrom eliminating information acquisitionand managementcould be passedalong to you. Yet in the modern era of automatedinformation management'most managershave implicitly acceptedthe notion that information is good, more information is better, and all possibleinformation is best. In fact, information fbr control of operationsis necessarywaste (Type One Muda). Managers ought to be minimizing the need for it rather than maximizing it's availability.In the future sraresand ideal state we will show how As the weekly order information flows acrossthe top of the map from headquartersto headquarters,it is also flowing from each headquartersdown to plant production control departmentswhere weekly schedulesfor each plant are set. For example, Alpha Motors, AssemblyPlant ProductionControl takes the schedulesfrom Alpha Headquarrersproduction Control, runs them through its computerized Materials Requiremenrsplanning (MRp) system (after a delay averagingsix days),and crearesa rolling six-day ahead schedulefor the assemblyplant. This scheduleis fully sequenced(e.g,a blue Model A with high trim, then a green Model B with standardtrim) and takes into account iine balancingconstraints. For example, there are limits on how many Model As or Model Bs can be run down the line in a row without overloadingsome workstationswhere work content variessignificantly between Model A and Model B. These schedulesare rhen released to the plant floor.

At the sametime information is being releasedto the floor in each plant it is also being sent upstream,from plant-level materialscontrol departments,in the form of daily shipping releases.These are the preciseamounts of each part number the upstream plant is authorizedto ship to its downstreamcustomer on the next pickup. These daily releaseamounts are basedon known order lead times and the stocksthought to be on hand at the downstreamplant. From this it is apparentthat there are two separateinformation flows coming into each plant - the weekly schedulefrom each firm's production control department and the daily releasefrom the customer.Often, these flows are nor preciselysynchronized.So a third information managementloop comes into play, which is direct communicarion betweenthe materialshandling departmentin the downsrreamplant and the shipping department in the upstream plant. This direct link, usually a telephone voice line, becomesthe real production control and shippingmechanismwhenevermanagersat the ends of this link overridethe shippingreleasesand, in extreme situations,productionschedules.They usuallydo this basedon their direct observationsof emerging shortagesand their judgment about what to do in response.We have drawn these information flows between the plants with a dotted line and our information expediting icon - an old-fashionedtelephone.

A Warning on Order Data As you move upstream don't confuse the customer's official releasewith the amount each plant actuallymade. Instead gather from each facility data on what was actuallyproduced daily over an extendedperiod and compare this with customer daily requestsin the form of shipping releasesso you can see the relationof one to the other and the amount of variation in both. We're alwaysamazedthat companiesawash in information about what ought to happen do a poor job of recordingand preservingwhat actuallyhappened.So you may need to dig a bit or even assign an observerto captureaccurateinformationon l plant-levelproductionand shipping performance.What you find will be invaluablefor achievingyour future states.


Gurrent

State

Map

Showing

Information

Ftovv

I-"",,*I

-

| ?roduction I

f

Controt I

I lr-J I

+_

6 days

f-MEI-I

14 dayo

Cleveland,OH

tdr

Fuffalo, NY

1 V

/v44ffi luichiqanst,utl servtceco. frji. I

I lr{ | 6 daye

I

, I-1 -< 1""il?,21,"^l

DearbornHeights, Ml Tonawanda,NY

,zl Control

f--

I

MiF--] Harlingen,TX

I, Dailv I I

7..''''''''' (, _/1/L.-1

oooo..>

-+

Tonawanda,NY o RM336h. wt?110h. FG4Ah.

1

t .2.*.Y"7"...'

,=;,,.;;, ,Trrrr+

'...fr..J

Reynosa,Mexicot....-

Harlingen,TX

t E TRM ] 56 h. wt? 41h.

SShifts

25hif'rs

2 UaVS

5Davs E?E=1Dav Oefects = 4OO ppm

E?E=3Davs Defects =2000p?m

o.3 d.

+.od. 20.6 a. (3131e.)

32 .

T'"-1llr+

o.25d. 4.6 d, (3o s.)

-.''o..

Plymouth,Ml

I lf'J

lrN I 14 daye

I

10 dayo birmingham,Ml

t

4

t--:-;----l I vaity

T

I

Atpha I I I Dietribution I Center I L Ctevetand.oH <1 /r-J -

//

//- PrE?-1 +zosr I |

//

|

f--H----l r k

|

I--r-x{':'-

l.i,' l.l Crrrr-r>

1,3"l.'

2135T r c Zn r

| |

'txDay

f 1"-L

z+ur I

32oD

'\

WeetOrange,NJ Harlingen,fX

RM50h wt?2h.

aaaaaaaaaloaaaaaaaaaaaaaaa

2xYear

FG14h. 2Shifts

5 Days EPE = 1 Day DefecI.s = 5ppm

o.5d. 4

1

o.5 d.

4.O d.

4.Od.

o.5 d. 4

1

2.8 d, (12Oe.)

1

11(2) Ouality

MICHIGAN TO GAMMA

and

Delivery

GAMMA TO BETA

Screen

BETA TO ALPHA

ALPHA TO ALPHA PC

I I I

Demand Amplification For the pasr year,Alpha Motors sales order Bank has senr very stable weekly orderscalling for 960 vehicles per day, five working days per week to Alpha's HeadquartersProductionControl. And HQ ProductionConrrol has releasecl level weekly buckets of orders to Alpha's Assembly Plant Production Control and to Beta HeadquartersProduction Control. The actualbuild still variesfrom the schedule- due to pulling vehicles out of sequenceto correct defects or becauseof problems in the paint booth or due ro a lack of parts. However, by adjusting the scheduleand working overrime at the end of each shift as necessary,rhe output of Alpha Morors Assembly varies by only about SVofrom the 960 units planned for each day and all vehiclesbuilt are shipped on the daily train to the Alpha Distribution Cenrer.

Dernand

Arnplification

for Arpha

Motors

wipers/day 2800

amplification ot +l-

2600

4Oo/"

2400

3OVo

2OVo

2200

10o/o

2000 1920

OVo

1800 -1Oo/"

1600 '20o/o

1400 -30o/o

1200 -40o/"

1000 March

15

ALPHA PRODUCTION

20

25

ALPHA ORDERSTO BETA

30

Similarly,the mix of models (A versusB) variesby only about 5% daily as does the mix of wipers (StandardTiim with flat paint versusHigh Tiim with glossypaint.) On average,Model A accountsfor two thirds of production and Model B one third while StandardThim wipers accountfor two thirds of demand and High Tiim the remainder.Thus production and shipments are fairly stable ar rhe cusromer(rieht) end of our map. Yet, as we plot the production and order/releasedataback upstream,we nore that the amplitude of changesin both production and releasesincreasesmarkedly from facility to facility. Minor variationsin production at Alpha Motors Assembly become much larger by the time we reach Beta Wiper's assemblyplant, as shown below.

Dernanel

Arnplification

-nclrrding

Beta

Wipers

wipers/day

amplification ol +l-

2800

4OVo

2600 30Vo

2400 I I

2200

,,,

,

I I

l, 1t

1800 t

ll

1t I

I I

1600

1Oo/o

I I

I

I

2000 1920

2OYo

, , ,

0o/o

?J' tl

I I

tl

'- - 'l--,'

I

i;{

l, ll ll l,

I I

, ,

I

I

'1Oo/o

I

t

1400

-20o/"

I I

t

-30%

1200

-4OYo

1000 March

10

15

25

30

ALPHA PRODUCTION

ALPHA ORDERSTO BETA

BETA PRODUCTION

BETA ORDERSTO GAMMA


35

Bv the time we reachGamma Stamping,the variationsarc very large.Indeed, Gamrna Stamping'sreleasesto Nlichigan Steel varicd by nearly 40% in the month prior to thc arriyal of the mapping team.This infbrmationfor Gamma Stampingcompletesthe Demancj Amplification Screenlbr our current state.as shown below. 'lb

make this verv common phenomenonclearer,we've summarizeclthe maximum perccnrage

changein dailv productionand dailv releasesover rhe past month for each facility and alignecl them in a simplified Demand Amplification chart as shown at right. We've placed this chart in a box in the upper left cornerof our Current State map, as shown on the ncxr page spread.

Dernancl

Arnplification

screen

in Grrrrent

state

wipers/day

amplification oI +l-

2800

40o/o

2600 2400 2200 2000 1920

t

ivi ti"

1800

il-z

\

r i 'i r .'t ri .j r'tt'

j

:'r

-1Oo/o

:tt

1400

t. : i

-40o/o

10

ALPHAPRODUCTION BETAPRODUCTION GAMMA PRODUCTION

'Ib

ALPHAORDERS TO BETA BETAORDERS TO GAMMA GAMMA ORDERS TO MICHIGANSTEEL

deal r'viththc erraticorder flow, Beta,Gamma,and NlichiganSteel must either maintain

extra production capacityor carry large stocksof finished goods in inventory or disappoinr downstreamcustomersa significant fraction of the time. Becausefailing to ship on tirne to meet customcrneedsis an unacceptablcalternativefor suppliersin thc auto industryand bccauscextra tooling can be very expensivc,most firms in this industrv includine Beta.

36

Sirnplified

% variation

Dernand

Demand

GAMMA ORDER

Arnplification

Screen

Amplification

GAMMA PRODUCTION

BETA ORDER

BETA PRODUCTION

ALPHA

ALPHA

ORDER

PRODUCTION

Gamma,and N'IichiganStecl,carryextra inventrlricsro protectthe customcr.T'he cost implicationsof demand amplificationare therefcrre apparentin the amount of errra inventoriesin the value stream. Whv doesthis growingvariationexist?For the simple reasonsthat productionproblemsoccur in cvery plant (even the lcanest!),transportproblemsoccuron evcry link, feedbackon crlrrcnr conditionsand amountsof product on hand is nevcr completelyaccurate,and largeminimum productionand shipmentquantitiescausevcry small changesin the amountsnecded downstreamto producemuch largerchangesin the amountsrequcstedand producedupstrcam. To take the u'orst-caseexample, if one wiper is discovcredto be defective at thc asser-r-rblv plant and the re-orderamount is just on thc cdge of one new;rallet (containing320 r,ripcrs in our example)che re-orderwill jump to 2 pallets- or a total of 6,10wipers- even though only onc additionalwiper is needcd.And this phenomenoncan be repeatedseveralmore times as the order flows back upstream,creating a wave. The reasonthis wavc grows largcr as we move upstreamis becauseof the numbcr of schedulingpoints (B) and the length of the delays(totaling .58days) before infcrrmationis acted upon. Each system recalculatesits schedulebascdon its own (not very accurate)forccastsand on information from cusromcrs that is alreadyup to a week old. This is the familiarand dreaded"F orresrerliffect" documentedby Jay Forrestcrat MIT in the 1960s. The irregularitiesin the systcm are tlrther exaggeratedby the misalignmentof what the official schcdulingand releasingsystem(in the ccntralizedcompurers)are sayingand what the individualsin shippingand receivingjobs are seeingand doing.Then, as misalignments grow,confidencein the formal systemdeclincsand more and more of thc actualscheduling and rclcasingmay be done manually despitc the largeinvestmentsin informationtcchnologv.


Demand

GAMMA ORDER

Amplification

GAMMA PROOUCTION

BETA ORDER

BETA PRODUCTION

ALPHA ORDER

ALPHA PRODUCTION

I ",",*I

-

| ?roduction I

Controt

I f--

I

MRp-l

I lf{

|

6 daya

Cleveland, OH

Fuffalo. NY

I wTkryI

1 V

(anffi

l-t ^,1

lY2n?:"7:"1;'"*" r-]

DearbornHeights, Ml

-,- : -rt\ -;c"ltt-] :

i

\

3. . '.

'fonawanda,NY

..,.

C

t l w e e k ll t ' . . T-U 2a\

I- 6.-l--

\

r lr,flX,li,"l < ts ,zl Control I

f2"-1---'

'...

6 days

\

MRp-l

19)'\'

+.+J

x Tonawanda,NY

Reynosa,Mexico

RM336h. wt?110h. FG40h.

RM56 h. wt? 41h.

SShrtbs SDays E?E=3Davs Defecte

=2oooppm

EClCU

25hifts SDavs E?E=1 Dav Defects = 4OO ppm

o.3 d. 20.6d.(3131s.)

22(3)

3a

4.6 d. (3O s.) 21(3)

W I |

Shipdarch =6?allets

@

Final Gurrent

Map

State

Showing

Plymouth,Ml

Demand

Arnplification

ll'{ r 10 dayt

{-'N,l 14daye

6irmingham,Ml

i 4

EI

-4-4-1

I ,,Jl?,1,i, I center I I

Cleveland,OH

1

/f

ar6ot-6oto-o" 640^ |

a| 9etaWivers I I Croes-Oock I

Trr)

' -=*-l

t

l----,-+

|

I

-l

-t

J

El?aso,TX

n-s\t-->

Year

|

zooo"rA

@ | = 6?alteto I

@,"-J4

4.O d.

4

21zgr I

roznr I

I

I-T*-L:'t.'\. \ l.i'v l.l I

1

'

.rr,*o^t

zl -z*

o.5d.

|

l-lJ---] --

rl;-l lJ'v l.t

Harlingen,TX

i"f:i II |i 32ob

// //

TIME WestOrange,NJ 44.3 day

RM 50 h. wl?2h. FGIAh

31.Oday:

2Shifte

SOaya E?E = 1 Dav Defecl,s = Sppm

13.3 dayt

o.5 d.

4.O d.

o.5 d. 4

1

32b1 sec 54.7min

2.8 d. (12Oe.)

1

11(2) Ouality ' PPM DEF6CTS

and

Delivery

Scrgon

| 10,000

defeds

2000

7o DEFECTIVE DELIVERIES

1500

10

1000

ttr?*- t

500 o MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHATO ALPHAPC

The

Limits

of Our Map As thc team finishesrecordingthese product and information flows, it seemssensibleto conclude the Current State map at this scopeof mapping. The map does not go all the rvay downstreamto the customertaking dcliveryof a car at the dealershipand it doesnot go all the way upstreamto the steelmill, much lessto ore in the ground.Mapping theseaciditional stepswould doubtlessprovide additionalinsights,but to do so would require largeamounts of time and expenseto examine organizationswhose behaviorthe team has little prospectof changing right now. Yet cven within this scope,the map coversa considerablepgrtion of a lengthy and complex value streamand uncoverssomevery provocativepcrfclrmancefeatures.

What We See When We See the Whole With regardto physical flows we note that 421.3days and 73 acrionson thc product are nceded to achieve3,281seconds(54.7minutes)of value crearioninvolving only cight actions.This meansthat 99.9992%of the elapsedtime and 89% of rhe roralacrigns, while currently unavoidable,are of no value to the customcr.

we can expressthese findings in terms of lead times and invenrory rurns:

Gamma

CurrentState

20.6

+

LEADTIME(in days) Beta + Alpha : In-plant* 4.6 2.8 31.0 + Tiansporr = 13.3

Total 44.3days

INVENTORY TURNS(annually)** 1149805 *lncludesthreedaysspentin warehousesand cross-docks. **Notethatfacilities with simple,frequentactivities (e.g.,assembly operations) will havehigher turnsthanfacilities with manybatchoperations, and individual facilities will havehigherturns thanthe entirevaluestream.

With regardto qLralityand delivery reliability,we nore that end-of-the-valuesrreamindicators of both measuresare very good (5 ppm and lVa defecdveshipmentsto the customer)br-rtthis is achieved through a sericsof screenswith significantcosrsand delays. With regardto information about customer clemand,\\,e note rhat ordcr information is acted upon up to 17 times and storedfor up to 58 daysin queues.What is morc, six inclividualsin receivingand shippingdirectly intervenein mediatingorclerflows within an expensive, tcchnicallysophisticatedinformationmanagementsysremrhat on its face is totallv ar,rtomated. Evcn with this intervention- and in somecases probablybecauseof it - demancl amplification,with compcnsaringinventoriesto protcct customers,increasessteadilvto a very high level as onc looks back up the value stream.

40

State

Grrrrent

Srrrnrn

ary'

Gurrent State Total Lead Tme

Value Percentageof Time ( v a l u ec r e a t i n gt i m e t o t o t a lt i m e )

Value Percentageof Steps (valuecreating steps to total steos)

Inventory Turns

Ouality Screen (defectsat the downstream end over defectsat the upstream end)

Delivery Screen (% defectiveshipments at the downstream over o/"defective s h i p m e n t sa t u p s t r e a me n d )

Demand Amplification Index ( % c h a n g ei n d e m a n d a t d o w n s t r e a m e n d o v e r % c h a n g ei n d e m a n d a t u p s t r e a me n d )

Product Travel Distance (miles)

44.3 days

o.oB% 11%

5 400 B 7

5300

Finally,we must note a suddenlyobviouspoint about the performanceof the manv departmcntsand firms touching the physicalproduct on its 44-dayjourney and order information on its 5B-dayjourney: However effective the variousfunctions -

operations, productioncontrol, logistics,manufacturingengineering,quality, and purchasing- may be in achievingtheir own objectives,they are not at all effective in supportingthis product on are common to all its path to the customer.What's more, becausethe processesinv
therefore revealsseverelymal-performingfunctions all thc wav

up and down the value stream.


41

If this is an accurateportrayalof the current state- and, becausethe value streamteam has directly observedit, there is good reasonto think that it is - there are surely opportunities to speed the accuratedelivery of products to the customerwhile eliminating large amounrs of cost.To begin to do this we need to specify in rhe nexr secrionthe featuresof a lean extended value stream that can deliver these benefits.

The Power

o f S i mp l i city

"What do you consider the largest [scale]map that would be really useful?" "About 6 inches to the mile." "Only six incbes!...Weactually made a map on the scaleof a mile to the mile!" "Have you used it much?,I enquired." "It has never been spreadout... the farmersobjected [that] it would cover rhe whole country and shut out the sunlight! So now we use the country itself, as its own map, and I assureyou thar it does very well." -

Lewis Carroll, Syluie and Bruno Concluded, Chapter l1

As you experiment with drawing extended maps suitable for your product families,you may wonder just how much detail to include. We often find that novice reams- like Lewis Carroll'smyopic mapmaker -

want to record every conceivable{etail about the current state,as well as mapping the flow of every part in the finished product. To make room for all this detail they even createwall-sizedmaps in corporarewar rooms. But too much detail in an extended map interfereswith clear thinking about how to improve the value stream.We therefore urge teams to keep extended maps as simple as possible.The objective must be to truly "see the whole" by summarizingthe value srream on a singlesheetof paper (11" x 17" is a good size,43 in Europe) and to use this big picture to raiseconsciousness among all the value stream participants.Only then can you identify ways to quickly improve performanceall along the value stream and motivate the firms involved to optimize the whole.

r-) e^

Principles of a Lean Extended

Value Stream

Fifty yearsago Thiichi Ohno at Toyota enumerated seven types of waste in value streams. You may have them memorized by now but they bear repeating becausethe types of waste are the same at the process,the facility, and the extended value stream levels of analysis: OverproductionDefects-

Making items upstreambefore anyonewants or needsthem downstream.

Errors in products,paperwork supportingproducts,or delivery performance.

Unnecessaryinventory -

Products in excessof the amount needed to insure meeting

customer needs. Unnecessaryprocessing -

Activities not adding value that could be eliminated, such as

a separateinspeccionstep replacedby a self-monitoringmachine with auto-stop,or flashremovalafter molding eliminatedwith higher mold tolerancesand better mold maintenance. Unnecessarytransportation between work sites -

Moving products between facilities

that could easilybe consolidated. Waiting -

lJsually production associateswaiting for machinesto cycle.

Unnecessarymotion in the workplace -

Associatesmoving out of their work space

to find materials,lools, work instructions,and help. When mapping at the facility level and at the processlevel within facilities,we are always concernedabout overproduction due to poor information flows withiz facilitiesand the desireof managersto move productsaheadto meet performancemetrics for equipment utilization. (Ohno alwaysstressedthat overproductionis the worst waste.)We are also looking carefully for unnecessaryprocessing,defects,waiting, and motion. When we more our analysisof product and information flows to the extended, macro level, overproductionis still a critical concern but now due to erratic information flows between firms and facilities.And we are now speciallyinterested in the two final forms of waste:unnecessaryinventories (due to erratic information flows as well as incapableand batch-orientedupstream processes)and unnecessarytransportation (causedby location decisionsthat seek to optimize performanceat individual points along the value stream rather than the whole value stream).Reducing these three forms of waste - largely by better managing information flows and logistic.sextended-mappingof future states.

will be centrai concerns for our

PARTIII: THE EXTENDEDVALUESTREAM

What shoulda lean extendetlvalue streamlook like? First, everyone in the entire value stream should be aware of the rate of customer consumption of the product at the end of the stream. You are probably familiar with takt time, which is the amount of procluctdcmanded per unit time adjustedfor the amount of production rime available.This is a wonderfully uscful concept within every facility becauseit tells everyone rhe necessaryrate of production from minute to minute to meet the neeclsof the nexr downstreamcustomer.Howevel note that takt time will vary from facility to facility along a value stream if the amount of availableproduction time differs from facilitv to facility and if downstreamsteps incorporatemore than one unit of an upsrream component'Thus takt time at the Alpha Motors Assembly Plant is 60 seconds(tcr build 960 vehiclesduring the sixteenhoursof production time availableeachdav) but is 30 secondsat Beta'swiper assemblyplant running the sameshift pattern (becauseeachvehicle needstwo wipers)and would fall to l5 secondsif the wipcr assemblyplant switched to only a single eight hour shift each day. T.hus,in most cases'there is no single takt time for the entire value stream. However, every facility along on the stream needs to be aware of the encl rate of consumption to calculatefacility-specifictakt time. Production ar every Llpsrream stageshould run on averageat the same rate, as adjusteclfor the availablcamounr of productiontime at each step and the neeclt' make multiple copiesof some productsto incorporatein productsdownstream.Any time we see a chronic pattcrn of imbalancedproduction rates in clifferentfacilities we know we don,r have a lean value stream. However, pleaseunderstandthat every facility upsrream should not conduct its activities in lock step with the current rate of the end facility in the stream.This seemsto be the implication today of many naive claims for e-commerceand the web: "If you know the rate of end consumptionright now you can schedule y'urself accordingly."In facr, what each facility should produce each m.rning is a leveled mix of what the next downstreamfacility requests for delivery this afternoonor tomorrow Knowing changesin actual consumption at the end of the stream(particularlythe amplitude of the changes)is extremely importantfor capacityplanning but is not sufficient for controlling productioh todav.

44

-

What u'e can learn from comparingproductionratesupstreamwith actualconsumption downstreamis hou, faithfully the production control systemis sending true customer demand (which we call "signal") upstreamversusdistorted demand (which we call "noise"). If there is significantnoise,producing"demand amplification"unrelatedto true customerdesires(aswe see in our Current State map), stepsneed to be taken to eliminate these gyrationsin future states. A second feature of a truly lean extended value stream will be very little inventory. This inventory will consistof the minimum amount of (1) raw materials,(2) work-inprocess,and (3) finished goodsrequired to support the needsof the next downstream customergiven (a) the variabilityof downstreamdemand,(b) the capabilityof upstream processes,and (c) the inventory reqr-riredbetween processingsteps due to batch sizesand shipping quantities.Toyota calls the minimum amountsof invcntory neededto supportthe customersin a value streamat any given time the standard inventory. The standardis calculatedfor each categoryof inventory depending upon its function in the value stream.Toyota continr.rallyseeksto reduce this amount by decreasingbatch sizes,increasingshipmentfrequencies,leveling demand,and improvingcapability.

Lovv Low

lnwentories vvith High Demand = Ghaos Process Gapability

Variability

and

W e s o m e t i m e se n c o u n t e rl e a n i m p l e m e n t e r sw h o s e e kt o r e d u c ei n v e n t o r i e s along a value stream without botheringto calculatethe standardinventory n e e d e df o r t h e c u r r e n tl e v e l so f v a r i a b i l i t ya n d c a p a b i l i t yA. n i m m e d i a t e "lowering of the water level" may indeed "expose the rocks" and put pressureon everyoneto go fasterto reducevariabilityand improve capability.However,a more likely consequenceis chaos and outraged customerswhen the newly "lean" value stream fails to deliverthe right a m o u n t sw i t h t h e r i g h t q u a l i t ya t t h e r i g h t t i m e . A better strategyis to calculatethe standardinventoryat every storage p o i n t a l o n g t h e v a l u e s t r e a mi n t h e c u r r e n ts t a t ea n d i m m e d i a t e l ye l i m i n a t e i n v e n t o r i e sg r e a t e rt h a n t h e s t a n d a r d T . h e n l o w e r t h e s t a n d a r da n d r e d u c e inventoriesto the new standardin a future state after variabilityand capabilityissuesare addressed.

PARTIII: THE EXTENDEDVALUESTREAM

The

Many

Forms

and

Uses of Inventory: Greating a Strategy We've definedthe three traditionalcategoriesof inventoryand comparedthese with severaladditionalcategoriesin common use (as shown in the next page).Note that these categoriesoverlap."Finishedgoods" can be "safety stocks", "buffer stocks",or "shipping stocks".What's more, the same item-a pallet of windshieldwipers in Beta'sfinished goods area,for example-can be included in severalcategories-a "safety stock" and a "buffer stock" in the case of our wiper-depending on the practiceof the firm and the facility.The key point with regardto definitionsis for the members of the value stream team to agree on a consistentuse of this sometimesconfusingterminology. The key point with regard to the inventoriesthemselvesis for the team to make a strategic plan for every part in a future state,describingthe reasonsfor keeping specificamounts of materialsand goods in specificplacesas standardinventory.As they do this, many value streamteams decideto actuallyincreasethe amount of inventoryin a downstreamfinished goods area near the schedulingpoint, both as a buffer stock and as a safety stock.This guards againstdemand amplificationtraveling upstreamand facilitatesthe reductionof work-in-processand raw materialsto a very low level in upstreamfacilities.By increasing inventoryat one point - seeminglya step backward- it may be possibleto reduce inventoriesat every other point along the value streamand for the value stream as a whole.

The

Manyz

Forrns

of lnrrentort/

E:E

ll lT. #, ll #=l EE: l'T'all F+l|mql

46

Tlrpes

of

lnrrentory

TRADITIONAL CATEGORI ES Definedby their positionin the valuestream Raur Materials Goodsenteringa facilitythat havenot yet beenprocessed. Work-ln-Process Itemsbetweenprocessing stepswithin a facility. Finished Goods Itemsa facilityhascompletedthat awaitshipment.

A D D IT ION A L C ATEGORIES Definedby their purposein the valuestream Safety Stocks Go o d sh e l da t a n y p oint( in RawM ater ials, W lP,or Finished prevent Goods)to downstreamcustomersfrom beingstarved by upstreamprocesscapabilityissues. Buffer Stocks Goods held, usually at the downstream end of a facility or process,to protect the downstream customer from starvation in the event of an abrupt increasein point demand by a customer -a demand spike that exceedspoint production capacity. Shipping Stocks Goods in shipping lanesat the downstreamend of a facilitythat a r e b e i n g b u i l t u p f o r t h e n e x t s h i p m e n t .( T h e s ea r e g e n e r a l l y proportionalto shipping batch sizesand frequencies).

PARTIII:THE EXTENDEDVALUESTREAM

47

A third feature of an extended lean value stream is as few transport links as possible between steps in the production process. As we have noted earlier,no customer attachesvalue to moving thc product around.Indeed,customerswill often be willing to pay more for a product if it can be supplied in the eract specificationthey want very quickly. Thus we need to ask about every transportlink: Is this really necessary? SLrbstituting modes, notably air fbr truck, is certainly an alternativeway to reduce thftrughputtime, but typicallyat an unacceptablecost premium. In general \\rewant to eliminatetransportratherthan speedit up. A fourth feature of a lean value stream is as little information processing as possible, with pure signal and no noise in the information flows that remain. This meanspulling information managementdown from highcr levels of the organization,in remote informationmanagementdcpartments,to the shop floor where each processingstep and each facility can signal the previous srcp and facility directly about its immediatenecds.We should schedulethe cntire value streamfrom only one point, in this casethe assemblyline of Alpha, and pull materialsback up rhe value streamfrom this point. A fifth feature of lean value stream will be the shortest possible lead time. Indeed, this may be the most importanrof all. Thiichi Ohno ofren remarked the whole point of the Toyota Production System was simplv to reduce lead times from raw materialsto the customer.The shorter the lead timc, the morc likely it becomesthat thc entire value stream can respond to real orders rathcr than inaccurateforecasts.And the more likely it becomesthat defects,proccss variations,and every other problem will be detected before significantwasre is created. A final principle of a lean value stream at the macro level is that changes introduced to smooth flow, eliminate inventories, and eliminate excess transport and lead time, should involve the least possible or even zero cost. What's more, capital costs,when they are necessary,should be deferred until casierand quicker actionshave alreadybeen taken.

48

The Plan for the Remainder Breakthrough Guide 'l'he

of this

last principle suggeststhat we addressin-plant product flolr,sfirst using

the methods describedin Learning to See and Creating Continwous Flow. 'Ihese entail practicallyno capitalcostsand will creatcwhat we will call our Future Statel, as describedin Part IV of this Guide. Once flow and pull have been introducedwithin eachfacility,eliminating many wastefulstepsin the process,it will be time to examine the information and transportlinks between facilities.Often it will be possiblc to smoorh the value stream and reduce the need for buffers by introducing direct feedback loops with leveling mechanismsfor information flowing from each downstream"cllstomer"to the precedingupstream"producer".We will do this in Future State 2, as describedin Part V of this Guide, noting rhar a smooth pull of orderscan often be tested on an experimcntal basisfor one product family without effecting information flows for other productsgoing through thc samefacilities. With information flows smoothed and noise reduced, it will be timc to reduceshipmcnt sizeswhile increasingshipment frequenciesbetween each facility and it's upstreamcustomer.We will also do this in FurLrreState 2. Frequent delivery in small lors will require the introductionof some tvpc of "milk run" logisticsbetween facilitiesand for the first time will raisethe issue of relationsbetween multiple product families.This is becauseorganizinga milk rLrnfor the parts needed for only a single product family ar rhe next downstreamfacility will often be impractical.Instead, major portions of a facility or an entire facility may need to make rhe leap from dedicated shipments arriving infrequently to sharedshipments arriving often. Finally, after Future State 1 and Fr-rtureState 2 are achieved,it may make senseto begin re-sizingand relocatingactivitiesin order to "compress"the value stream.Doing this may make it possibleto remove large remaining blocks of time and cost and move the value streammuch clgserto perfection in an ldeal State.

PARTIII:THE EXTENDEDVALUESTREAM

49

Becausevalue streamcompressionwill often require significanrinvestments by a firm at Point A that lower costsfor a firm downstreamat point B, some method will be needed to justify these investmenrsand to determine how the firms can sharethe cosrsand benefits. We'll provide some simple guiclelines in Part VI of this Guide, describingthe Ideal State. A truly ideal state will be the happy circumstancein which all actionscreate value with zero defects and consumerresponseis instantaneous.No one is likely to reach this perfect realm soon,bur it is highly provocativeto ask what types of product designs,production technologies,and locarionallogic can close as much of this gap as possible.what's more, the processof developing an Ideal State can provide an invaluable North Star for steering each value stream through succeedingproduct generationsthat come closer and closerto perfection.

5()

Future State 1 Once the team completesthe Current State map and everyone agreesthat it is accurate,the key question becomes,"What should be done in what sequenceto create a better future state?" In our experience,the easiest placeto start is to createfuture stateswithin the walls of each of the facilities the product visits en route to the customer.By drawing and then achieving a future state of the type describedin Learning to Seewithin each major facility it will be possibleto achievea substantialimprovemenr in the performanceof the entire value streamand to do this within a short time. This createsconfidencein the processand give teams a sensethat much more is possible. Beginning with this step also has che critical advanrageof imposing a "price of admission" on all of the value stream participants.Drawing the current state map is fun but entails no real commitment. It's when you get to the, "What are we going to do today about the waste?"question that the hard issuesarise.Insisting that each participatingfacility and firm quickly implement actual improvements as the price of continuing with the exercise also tends to gain buy-in for the process.Yet the hurdle is nor roo onerous becauselittle capital investment is needed to achieve a future state within t h e i n d i v i d u a lf a c i l i t i e s .

Level

Pull and

Flovv Within

All

Facilities

In Appendix B, we show the Future State Maps for the Alpha Morors Final AssemblyPlant, the Beta Wipers Component AssemblyPlant, and the Gamma Stamping Part FabricationPlant. At the urging of the extended value stream team, these were implemented and stabilizedover a three-month period by newly appointed value stream managersin each plant. (As noted earlier,no changeshave been attempted at the Alpha and Beta crossdocks and in the Beta warehouse.This is both to keep the exercisemanageableand because we will seek to eliminate these facilities in Future State 2..) The cumulative result of these actionsat the plant level is shown in the summary boxes on the Future State 1 map.

PARTIV: FUTURESTATE 1

Demand

7ovariation

Amplification

35 30 25 20 15 10 5 GAMMA ORDER

GAMMA PRODUCTION

BETA OBDER

BETA PRODUCTION

ALPHA ORDER

ALPHA PRODUCTION

f "",,*I -r"ijl"#i^l tFt

t-il-f

+-

6 days

C-MEI-I

14 daye

Cleveland,OH

@

Buffalo, NY

fri{

lwichiqansteell ? Adavs I seiviceco.I

\

-e

v E 6 days

W | ?tant | ?roductio

r-1

DearbornHei7htz, Ml

a-sr.mt'-] ------\-

ii :.

>r..

\-_ \-".

|l W?.. l__ \..\ eekl I

/ lr"#7,21,",1. -

Ionawanda.NY

,zf Conrrol

t l l

f

ar;fi;iltlF"w,,kl l'------r-

. \3,..r:t-f ". ,-'8.-fr.. \'#!i fr

.

r----T 751 Liq\

' oor . .

> I 32nfr?.,, I '-rrr.+ l,-J lonawanda,NY.

A-s\?

nlfl""'7;."'J

DetaWipers Warehouse

| I Harlingen,TX RM16 h.

w t ?o h .

re vn'

I I 5oom. | la zeh:,ft;--] ehipaar,ch I =7zcoits I |-jD-=2;-| I arrlr:io^'1 =8% I Derective D"r*r"= I r| l tao o o p p m I f----;;;-------l

o.3 d.

| soo^.--ll l- shtpl^r*h I | =36?atetsI F"r."t-;4%1 f-----__-1

2Shilts SOays E?E=1 Day Defecls = 2OO ppm

4.Od. 5Jd. (3131s.)

20 (3)

52

I

M-Rr--]

o.25d. 2.Od.

o.25d. 1.2d. (3o e.) I (3)

Wiper Value Stream Future State 1

:

I

{ '--l Plymouth,Ml

14 daye

birminqham,Ml

I

/r

//

Cleveland,OH

,160 tDrv | | |

//

q=il

_._

I betaWipers I I Cross1ock I

il;-l I p,v [-] !----i5

|

640^ 426e1 214Hr

32oe 21351

|

lxDay

lo7Hr

I

1 | | I

I |

I

\

lT---l

'Y,Ys:oi" I b:I+ t_

-r-]

rrll yl---X___+ .----> l| | ---<'-+ | -l I

.

t

.\i.

IFJ

10 da

f rfrrr=r} WeetOrange,NJ

Harlinaen.TX

RM 15 h. w t ?2 h . FG14h.

"oaaaaalaooaaaaoaaaaa.,

2x Year

29hifte 5Davs E?E = 1 Dav Defecf,s = 5PP^

4.Od.

o.5 d. 4

1

o.5 d.

4.O d.

o.5 d. 4

1

1.3d. (12Os.) 7 (2)

1 ,

Ouality

and

Delivery

Screen

ppm deteds 2000

% defedive deliveries

r500

1000

500

0

MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHA TO ALPHA PC

Future

State

1 Ghanges

At Alpha Motors Assembly it was possibleto eliminate a kitting operation and deliver parts directly from receiving to lineside.At the same time, a simple pull system was introduced between final assembly and wiper subassemblyto cur the amount of invenroryin half while smoothing the flow. At Beta Wipers the team took advantageof the approachdescribedin Creating Continuous Flow ro relocate4 formerly srand-alonetasks into one cell while reducingthe number of productionassociates needed from five to three. At the same time, the team createdleveled pull loops from the supermarketin the shipping areato the assemblycell and from the assemblycell to the supermarketin receiving,to reduce invenrories and smooth flow. Finally, at Gamma Stamping, the batch narure of che stamping and painting operationswas acceptedfor the moment. Rather than trying to introduce continuous flow by cellularizingthese operarions,the team focusedon introducing leveled pull loops berween the three operations and reducing set-up times (from one hour ro three minutes on the two stamping pressesand from 30 minutes to five minutes in the painr booth). This permitted much smallerbatchesto be made,with frequent replenishmentof the downstreamsupermarketsin small amounrs. Note that the extended map itself seemshardly ro have changed.All of the facility boxes and flow arrowsare as they were. Yet the summary figures in the facility data boxes are now considerablydifferent and the data in the summary box at rhe lower right corner is different as well. Specifically,the total number of steps has been cut from 73 to 54 and total throughput time has been reduced from 44 to 24 days.All of the indicatorsof value stream performancein Future State 1, compared with the Current State,are shown on the next page. Euen more important, each firm participating in this shared ualue stream has quickly taken concrete steps to eliminate wdste and improue performance in its own operdtions.This is not an example, as we see all too often, of downstreamfirms and facilities lecturing upsrreamfirms and facilities on improving their performancewhile doing nothing about their own performance.

Frrtrrre

I Srrrnrn

State

Total Lead Tme

Value Percentageof Time ( v a l u ec r e a t i n gt i m e to total time)

Value Percentageof Steps (value creatingsteps to total steps)

Gurrent State

Future State 1

44.3 daye

23.9 daye

o.oB%

o.16%

11%

15%

5

I

400

200

B

B

7

7

5300

5300

Inventory Turns


Delivery Screen (% defectiveshipments at the downstream over o/odefective s h i p m e n t sa t u p s t r e a me n d )

Demand Amplification Index (% change in demand at downstream end over 7ochange in demand at u p s t r e a me n d )


ary'

At the level of the scampingplant, che component assemblyplant, and the final assembly plant these changesare often truly impressive.In the most striking instance- the Beta Wipers component assemblyplant in Reynosa-

the number of steps at has been cut by

60Voandthe throughputtime has been slashedby75%. However,in terms of the entire value stream,as experiencedby the customerat the end, the changein performanceis more modest:a 25% reduction in the number of steps and 46% reductioriin total throughput time, which is still much longer than the end customer is willing to wait. Thus the whole value stream is still producing to a forecastrather than to confirmed order.What's more, the performanceimprovements only assumethese magnitudeswhen every facility touching the product achievesits future state.

PARTIV: FUTURESTATE 1

55

This realizationprovides a useful insight to rhe value srreamteam abour the limits of isolated,individual action: If you want ro achieve a breakthrough- a "game changer" - that altersyour position in your industry or producesprofits far above industry averages,you'll need to optimize the entire value stream rather than stopping after improving the flow along small coursesof the streamwithin your own facility - as many managersand firms do today. Any firm unwilling or unable to implement the Future State I in its facilitiesis unlikely to be willing or able to take the next steps to achieve Furure State 2. 'Iherefore, if it becomesapparentat this point that some participantswon'r make this commitment, it will be critical to find alternativevalue stream members befcrre other participantswaste time in futile efforts.An obvious additional question for thc firms downstreamto ask is, "Do we want to keep the do-nothing upstream firms in our supply base?"

T h e D i sta n ce

S ti l l to Go

While the first five items in the summary box show a substantialimprovement between the Current State and Future State 1, the last three items - the cleliverv screen,the demand amplificacionscreen,and travel distance-

show no change.

This is becausethese indicatorsare driven by relationsbetween facilities rather than activitiessolely within facilities.The next challengefor the team therefore is to tackle relationsbetween the facilities.This necessarilyrequires tackling operationalrelationsbetween firms.

56

Future State 2 As the value stream team achievesFuturc State 1 within each facility and begins tcr sensethat collectivemanagementof the value streamis possible,it's time to take thc next leap.This is to draw and quickly achievea Future StateZ, introducinga smoorh and leveledpull alongwith frequent shipmentsbetween eachof the facilities.

I n s ta l l i n g

L e ve l e d

Pull Betwr een

Facilities

In concept,this is very simple. What we want to do is to link each point of use of the product in a downstreamfacility with the prcvious point of production or shipment in the next upstreamfacility. In this way, consumption at thc point-of-useis tluickly and exactlyreplenishedby the nexr upsrreamprocess. In practice,shipping qr-rantities u'ill be considerablylargcrthan minimum trrroduction quantities,even in a very lean value stream.For example,the minimum shipping quantity of wipers to the final assemblyplant in this casc is one paller with 20 tra1,s of wiper arms with each tray containing 16 wiper arms,for a total of 320 wipers. It is simply too expensiveto ship individual rrays,much lessindividualwipcrs. The minimum productionquantity,by contrast,would be one tray of 16 wipers. This is becauseset-up times and cosr ro alrernareberween -fyp" A and Type B wipers in the two trim levels are now zero at thc Beta Wiper Plant, after implementingF'utureState 1. But itwould still be too expensivefor materials handlersto wrap and movc individualwipers. Therefore, to level production to the maximum extent feasible as orderstravel back upstream,we will want to send production signalsto the work cell at Beta by travs ratherthan by palletsand to level theseorders.For example,if 20 trays(one pallet) are ordered by Alpha Motors Assembly with the order consistingof: 5 trays of Type A, High Trim (which we will call Part #1) 5 trays of Type B, High Trim (Part #2) 5 trays of Type A, Low Trim (Part #3), and 5 Trays of Type B, Low Trim (Part #4)

PARTV: FUTURESTATE 2

57

we will want to sendtheseordersro the Betaassembly cell in the sequence: 1t 2 l 3 | 4 l 1t 2 l 3 I 4 t 1t 2 t 3 I 4 t 1 t 2 t 3 t 4 t 1t 2 t 3 t 4 rather than in the sequence:

1I1I1|1I1t2t2t2t2t2t3

t3 t3 t3 t3 t4t4t4t4t4

By repeatingthis production leveling processar every link upstreamwe will continuallv smooth production rather than creatingwaves due to batchine. In practice,there are many ways to achieve this result. Some firms install pull systemson a strictly manual basisby collecting kanban cardsfrom trays and phoning or faxing these ordersback to the next upstream facility. There, kanban signalcardsare written up and sent to the finished-goodssupermarketto assemblethe next shipment. (When plants are very close together and shipments from the next upstreamfacility occur many times a day - not the casein our example - the cardscan be sent back with the truck bringing the new parts and returning the empty pallets. For many years,this was the primary method of information transferin Toyota City.) A small step up in automationwould involve the use of an electronicreader ro scanthe kanban cardsfrom emptied trays and send this information through an Electronic Data Interchange(EDI) network to the next upstream facility. There, new kanban cardscould be printed and releasedto the finished goods supermarkerto inserr in trays and place in pallets for the next shipment. (When these trays are received in pallets ar rhe downstream facility' the cardscan be scannedagain to confirm receipt and trigger supplier paymenr. They would be scannedone last time - and discardedto complete the cycle - when they are removed from the empty trays as the parts are consumed in the downstreamprocess.) The cardsremoved from trays in the upstream supermarketas product is shipped would then be placed in some type of load-leveling(heijunka) device before transmission upstream to the previous processingstep. A further step in automation that has become atrractiverecently is to substitute a simple web-basedinformation transfersystem for the EDI link. The bar code scanningand the printing of new cardsat the upstreamfacility remain the samebut now the dam are senrover the web. (This configurationof information managementis shown in the diagram below.) Still a further step is to eliminate the cardsaltogetherand send electronic signalsdirectly from the downstreamprocessto the supermarketin the next upsrreamprocesswhere shipping instructionscan be displayedon screensor hand-held devices.However, we alwaysstart to get anxiouswhen information disappearsinto complex electronic sysrems

Electronic

kanban

rrsing

a bar

code

reaeler

I I

-t

Heijunkadevice I t - - - r - - - - ! - - - t

-

I I I I

I I I I I ! I I I

Y

I I I

---1

I I I

l

via Web

t@

|Card I l?nnterl

rytttt+l

r

: l-------:

f cr,.dl lg,cannerl

-i '

Clean,?aifii"&.Bake

Gamma1tamping

A99EMBLYCELL

DetaWipers

Note that the rows in the heijunka box are for the four types of parts in this product f a m i l y w h i l e t h e c o l u m n s ( a c r o s st h e t o p ) a r e f o r t h e p i t c h ( r a t e )o f w i t h d r a w a lo f t h e cards for conveyanceto the upstream paint process.

whose inner workings are opaque to line managersand production associates. We advise using the simplestpossiblesystemthat can get the job done, acknowledgingthat some businessesinherently require more complexity in information managementthan others. The key point to note about each of these arrangementsis that there is no need to send day-to-dayproduction instructionsdown from MRPs in the plant office or ar company headquarters.Nor is there a need for customersto send daily releasesgeneraredby their schedulingcomputers.Rather than requiring elaboratecalculationsin a centralized processingsystem on what should be produced in each plant and at each machine - given expected operatingconditions and pre-establishedlead times - the new system simply, reflexively re-ordersfrom the next upstream point what hasjust been consumed by the nextdownsrream point. Note that the telephone-basedexpediting loop, which was often rhe real schedulingsysrem in the Current State and in Future State 1, is now gone. If small amounts of parts are re-orderedand shipped automatically,accurately,and frequently in responsero acrual use, the need for expediting is eliminated. We've drawn this new information managemenr system in our Future State 2 map.

PARTV: FUTURESTATE 2

Demand

GAMMA ORDER

Amplification

GAMMA PRODUCTION

BETA ORDER

BETA PRODUCTION

ALPHA ORDER

ALPHA PRODUCTION

RM24 wt?62 FG12 3 thifr,s

RM 16

wtPo FG 12 2 Shitrs

5 Days E?E = 1 Dav Defects = 25O ppm

o.3d.

4.Od.

a.o d. (3131s.) 20 (3)

60

5 Davs

EPE=1Dav Defects = 50 ppm

1.2d.(3Os.) B (3)

Wiper Value Stream Future State 2 Shovving Level Pull Betvveen Facilities

;:,^,loiaeroanul

rl

Dirmingham,Ml

t\

-T

I Daity I

Alpha Materials Conlrol

Z1z1--l Atpha

Alpha ?roduclion Control

I I I

I Distribution I Cen+er I

Cleveland,OH

#r-*r 32oo I

|

ll t=fl

bxof -%

l xDay

RM 15

wt?2 FG14 2ShifIs SDays EPE='lDav Defects = 5 ?P-

4.5 d.

o.5 d. 1.3d. (12Os.) 7 (2) Ouality

and

Delivery

Screen

PPM DEFfCTS

% DEFECTIVE DELIVERIES

)ooo

10 1500

1000

500

dofective deliveries

@....

0 MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHA TO ALPHA rc

The Need

for Gontrolled

Experiments

"But," you will say,"how can you do this for information flow for only a single value streamco-mingledwith many others?The samecompurer sending signals to control this streamis alsoschedulingother streams.Surely the whole sysrem must be changedin order to changeanything and this, realistically, is a massive and costlyundertaking." Actually massivechange is nor necessary. Just as we have disconnectedour sample product family from the MRPs within severalplants in Future Stare 1, and installed simple pull loops between activities within each plant, we can disconnectindividual value streamscurrendy running between facilities under centralconrroland install simple pull loops. The key point is for the value stream ream ro take this opportunity ro try the experiment and judge the results.We confidently predict that the performance of the value stream as mapped in Future State2 will argue forconverring more and more product families to simple pull systemsso rhat the overly complex production control systemscommonly in place today are graduallyconverted to an activity where they are actually useful. This is capacityplanning on a total systembasis.

Lean

62

Lab

/c

7^ \-t

HUU Futn Installing

Frequent Transport

Loops

The logicaland necessarycomplementro pull systemsberweenfacilitiesis increasedshippingfrequenciesbetween facilities.This can be achievedby converting infrequent full-truck direct shipments between two facilities to frequent milk runs involving severalfacilities. This has an additional and substantialbenefit. The introducrion of milk runs and more frequent deliveriesmakes it possibleto eliminate the srop at the Beta Wipers warehousein Harlingen and the long excursionto the Alpha Motors crossdock in El Paso.This saveseight steps and six days of throughput time and a thousand miles of rransport.(Plus, if the parts for other value streamsusing these facilities are treated similarly,the facilicies themselvescan be eliminated with major cost savings.) We've drawn these changesin the F'uture State 2 map by substituting our icon for milk run replenishment loops for the striped push arrowsused in the Current State and Future State 1.

milkrun replenishment

Introducingpull loopsand milk runs on an experimentalbasiswill require a modest investment, but bounding the experiment can keep the amounts small until resultsare in and a decisionis made on whether whole production systemsshould undergo conversion.And often these days,other suppliers and customerswithin an industry are alreadyusing milk runs. Perhapsyour product can tag along.

PARTV; FUTURESTATE 2

6:

7o variation

Demand

Amplification

35 30 25 20 15 10 5 GAMMA ORDER

GAMMA PRODUCTION

BETA ORDER

BETA PRODUCTION

4-/v/l

ALPHA ORDER

ALPHA PRODUCTION

W^Â

Daity I ba;i;tr ^ | luicrtisansteetl J center lsewicecenterla_\| I

Dearborn{eiqhts,Ml

<-

-1

I

ii

ii iv

I

I

beta

wipe.g

I

I

Reynosa,Mexico F.M24 wtP 62 FG'12. 3 thifr,s

21hifr,s

SOays E?E = 1 Dav Defects = 25O ppm

5Davs E?E = 1 Dav Defects = 50 ppm

o.3 d.

4.Od, 4.o d. (3131e.) 20 (3)

64

RM 16 WIPO FG12

1.2d. (3Os.) I (3)

(

W

Wiper Value Stream Future State 2 Shovving Frequent Transport Loops

loraeraanu I birmingham,Ml

+

L _T I ouiryI

Alpha Materials Conl,rol

ZLa-'1 Atpha

Alpha ?roduclion Control

I I I

I Diotribution I Cenrer I

Cleveland,OH

(\7 "*^-1

ll I x: I I l-J-J

Ioxoxl---%

1x D a y

Weet Orange,NJ RM15 wl?2 FG14 25hitts SDavs E?E =1 Dav DefecLs = 5PP

o.5 d.

4.5 d, 1.3d. (12Os.)

7 (2) and

o'uality PPM DEFECTS ' 2000

Delivery

Screen

V DEFECTIVE DELIVERIE

defeds

10 1500

1000

500

de{ective deliveries

@.....

0 MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHA TO ALPHA PC

Frrtrrre

State

Total Lead l-ime

Value Percentageof Time ( v a l u ec r e a t i n gt i m e t o t o t a lt i m e )

Value Percentageof Steps (valuecreating steps to total steos)

Inventory Turns


Delivery Screen (% defectiveshipments at the downstream over Yodefective s h i p m e n t sa t u p s t r e a me n d )

Demand Amplification Index ( % c h a n g ei n d e m a n d a t d o w n s t r e a m e n d o v e r 7 0c h a n g ei n d e m a n d a t u p s t r e a me n d )


Totaling

the

2 Srrrnrnary Current State

Future State 1

Future State 2

44.3 days

23.9 daye

15.8 daye

o.o8%

o.16%

o.6%

11%

15%

21%

5

I

14

400

200

50

B

I

3

7

7

5

5300

5300

4300

Results

The consequenceof smoothpull signalsand frequent replenishmentfor our eight indicatorsof value stream performanceis shown in the summary boxes on the Future State 2 map and in the chart above.The most striking change from Furure State 1 to Future State 2 is the dramatic reduction in demand amplification,qualiry problems,and late shipments as the orders move back upstream.The amount of variation experiencedat Michigan Steel is now much closerto the very low level of variation at Alpha Motors Assembly.In addition the dramatic reduction in shipping complexity and lag time between the creation of a defect and its discoveryat the next downstreamprocesshas causeddefects and shipping errorsat the upper end of the value stream to convergeon the low levels at the lower end of the value stream.

66

Compressing

the Value Stream

So far we have left every value creatingactivity in its original place,changing only informationflows and shipment frequencieswhile eliminating unneeded warehousesand cross-docks.Although the value stream team has cut the number of stepsfrom 73 to 39, reduced throughput time by 64%, and greatly damped demand amplification,much waste and long time lags remain. Becauseit appearsthat moscof the remaining waste and time are due to the need to move the product between many facilities and over long disrances, a logical next step is "value stream compression"to relocateand co-locate value-creatingactivities so they can be performed fasterwith lesseffort.

What

is the

logic

of

relocation?

The first principle is simply that all manufacturingsteps in the product shouldbe moved as closetogetheras possible.Ideally this would even be in the same room. A secondprinciple is that the closerthis compressedsequenceof activities is to the customer- Alpha Motors Assembly in our example - the better. The objective of lean thinking, after all, is to reduce cosrsand improve quality while getting customersexactly what they want when they want it. Remote manufacturingalwaysworks againstthis goal becauseit increases responsetime once the customers'desiresare known. The unavoidable consequencefor remotely located manufacturerswho are determined to immediately serve their customersis to createinventoriesof finished units produced to (usually inaccurate)forecasts.In the currenr global security environment, where shipments acrossbordersare subject to disruptions, this is even more the case. "Do it all in one place" and "locate that place next to thg customer" are useful principles to get started.However, a critical third rule is necessary: That if proximity should entail extra manufacturingcosts(although the reversewill be more common), these cosrsmusr be weighid againstthe value of the time savinqs.

PARTVI: THE IDEALSTATE

These principlesin combinationsuggesta very simple locationalgorithmfor most products: 1. If the cusromcris in a high labor-cosrcounrry(e.g.,the [J.s., Japan,Germany) and needsimmediateresponseto orders,and if the product has relativelylittle labor content, conduct all of the manufacturingsteps in close proximity and close to the customer in the high-wagecountry. 2. If the customeris in a high labor-costcountrv,is willing to wait for some shipping interval, and the product is price sensitive,manufacturethe entire product, from raw materialsto finished goods,in closeproximity in a low-cosrlocale,shipping Only the final goods.In our experiencethe correct location is almost alwaysat a low-wagecountry within the region of sale.F-orexample, Mexico for the fl.S., China fbr Japan,Poland fbr Germany.Shipment of the finished product by rruck, or a short ferry ride, and acrossonly one border can still permit responseto thc customerwithin a few days,while shipment by seafrom anothercontinent requireswecks. 3. If the customerin a high labor-costcountry needsimmcdiate responsebut thc product has high labor content, do a careful costing exerciseto determine the correctlocationof manufacture.The best locationmight vary from a very low-wage site in anotherregion of the world, with the product even deliveredby air, ro a new technologyremoving high-costmanufacturinglabor in the high-costcounrry of sale and permitting the conduct of all manufacturingstepscloseto the customer. 4. If the customeris in a low labor-costcountry and scalerequirementspermit, manufacrurethe entire product - from raw marerialto finished goods- in geographicproximity in that counrry. As the wiper value streamteamslooked at the situationand ponderedtheserules it becameapparentthat the best locationfor an iclealstatein this casewould be immediatelyadjacentto the vehicle assemblyplant in the high-costcountry (the L.f.S.)This was becausethe amount of direct labor content in the product was actuallyvery small,indeed only thirty secondsat rhe wiper assemblyplant and a vanishinglyslight amounr ar rhe stampingplant. (The number.ofwiper assembly operatorsrequired had already been reduced from five in the Current State to three in Future State 2.) The team found that a small increasein direct labor costsfrom relocationof this assemblystep from Mexico ro rhe tl.S. -

even when traditional corporateoverheadswerc added to direct wage costs- would be more than offset by a big reduction in shipping, inventory, and generalconnectivity costs.

68

--

l d e a l S ta te

Changes

The value stream team therefore created the Ideal State map shown on the next page.Note that wiper assembly(inclLrdingthe blade-to-armassemblystcp previouslyconductedin Alpha'sassemblyplant),painting,and stampinghave now been compressedinto one room in a "supplier park" clnthe site of the Alpha Motors assemblyplant. A cheaper,low-speedstampingpresshas been introduced, which we call a "right-sized"tool becauseits capacityis prt-'portional to the requirementsof this value stream.This pressis also able to make both the ;rrimary and secondarystampingsfor all of the other parts needed for the wiper assembly (seethc schematicdrawingon pages12 and 13 showingtheseparts)and in very small batchesto minimize inventoriesand lead times.A mini paint booth - a secondright-sizedtool - has also been designedand is located between the stampingstep and wiper assembly. Bccausethc new wiper manufacturingmodule gets an electronic signalon what to build next as eachvehicle leavesthe paint booth in the vehicle assemblyplant (a 3-hour lead time) and becausethe time neededfrom the startof wiper assemblv until delivery to the final assemblylinc is lessthan thc availablelead time, wipers with high and low trim for vehicle models A and B can now be assembledto line sequence.They are then placedin line-sequencedtraysof 40 wipers and conveved to the fit point on the final assemblyline every twentv minrrtesby a "water spider" (a small cart pulled by a converted fork-lift). The water spider lo<-rp connectsseveral similarcomponentplantsadjacentto the Alpha final assemblyplant, bringing back empty trays and needed parts to the wiper assemblyareaon each circuit.

Oc

s PARTVI: THE IDEALSTATE

Demand

GAMMA ORDER

Arnplification

GAMMA PRODUCTION

BETA ORDER

BETA PRODUCTION

ALPHA ORDER

ALPHA PROOUCTION

NewJersey1beel 5ervice Center

Wiper

Value

Stream

ldeal

State

EaetOrange,NJ

o.4 d.

70

W Dearborn.Ml

Alpha Distribui;ion Center

Alpha ?roduction Alpha Control Materials Control

%

/ Daily

t--J'

I I t

I--ELL

-l

I-cE[_-l

AlphaMotors

@Gl-ffiful

o.5 d. 1 . 1 d(.3 1 6 1 s . ) 20 (6)

O.8 d. (12Os.)

1

7 (2) Ouality

MICHIGAN TO GAMMA

and

Delivery

GAMMA TO BETA

Scro€n

BETA TO ALPHA

ALPHA TO ALPHA PC

PARTVI: THE IDEAL STATE

71

ldeal

State

Srrrnrn

Total Lead Time Value Percentageof Time ( v a l u ec r e a t i n gt i m e to total time)

Value Percentage of Steps (value creatingsteps to total steos)

Inventory Turns

Ouality Screen

(defectsat the downstream end over defectsat the upstream end)

ar,y-

Gurrent State

Future State 1

Future State 2

44.3 days

23,9 daye

15.8 daye

days

o.oB%

o.16%

o.6%

1.5%

11%

15%

21%

27%

ldeal State

2.&

5

I

14

79

400

200

50

2.5

B

B

3

1

7

7

5

1

5300

5300

4300

525

Delivery Screen

(% defectiveshipments at the downstream over lo defective shipments at upstream end)

Demand Amplification Index

( % c h a n g ei n d e m a n da t d o w n s t r e a m e n d o v e r % c h a n g ei n d e m a n d a t u p s t r e a me n d )


Dramatic

Changes

Throughput time from raw materialsto customerhas now been reduced by 94Vot
72

Winners

Need

to Gornpensate

Losers

As future state and ideal state maps are drawn up, it will quickly become apparent that positive change is most likely if the team can find a way for 'l'his winnersto compensatelosers. is becauseit will commonly be the casethat a downstreamparticipant can get better value at lower cost if an upstream participant leavesout wasted steps,implements leveled pull systemswith its suppliers,introducesmore capableprocesstechnologies, and relocatesactivities.However, even when everyonecan see that the incremental savingsexceed the incremental costsof these initiatives,little is likely to happenunlessupstreamparticipants are compensatedby downstreambeneficiariesfor taking costly actionsthat <,rptimize the wholc. If it were easily possible to compare total product cost before and after the future state improvemen[s, compensation might be

an easierissue.Howevel traditionalpurchasingand accountingsystems are often incompatiblebctween value stream participantsand in any case are poorly suited for calculatingproduct costsfor each product family. Thesc systemstypicallyrequire enormousamountsof data to allocate overheadsby product and they usually fail to calculatecostsin a way that all participantswill acceptas valid. We proposekeeping it simple by ignoringtraditionalsystemsand instead determiningthe incrementalcost (in some common currencyunit) and the incremental benefit (in the same currency unit) of each proposedchange in 'I'his the value streamin future and ideal states. is surprisinglyeasyin manv casesand can change the focus of the value stream team from redressing (or defending)the mistakesand inequitiesof the past to discovering win-win-win alternativesft-rrthe future. The problem of cross-firmcompensationwill not be such an issueif the product being mapped is new and the courseof the value streamis not constrainedby existing facility locationsor even existing suppliers. However, it will still be important to calculateconnectivity costsfor various configurationsof the value stream to see which one will actbally produce the best combinationof low cost and rapid customcrrcsponse.

PARTVI: THE IDEALSTATE

73

Timing

the Leap to the ldeal State

Lower-speedpresseswill be cheaperand more capableif used on new part designs,and a change in the raw marerial provider will be required as well. (Note that New Jerseysteel is to be substitutedfor Michigan steel in rhe Ideal State,to reduce shipping distancefor steel coils from 500 miles and eight hours to 25 miles and one hour.)Therefore, the best time to leap to the Ideal state will be with the next product generation,when new process equipment will be needed in any case. The exerciseof creating an ideal srate ro contrastwith a business-as-usual state should be conducted for every new product generation.This can lead to a very creativejoint mapping of the ideal sratefrom the very start of the next design,when the barriersto doing everything right are greatly reduced.

A

Final Risk to Avoid In developing the examples for seeing the'whole we have learned of another risk for the value srreamteam to avoid. This is ro turn the mapping exerciseinto a conventionalcost study for a product family by trying ro map the flow of every part going into the product. when teams do this we've found that they lose sight of the key point. This is that the types of wasre exposedand the demand amplification discoveredare also presenr in every product family passingthrough all of the participant firms. The first purpose of the exerciseis to raiseconsciousness about systemicproblems and to spur the development of systemicsolutionsrequiring better performance by the functions, not to shavea bit of cosr out of one specific product and then declarevictory.

74

Achieving

Future States

Value stream maps at the macro-levelare very useful for raising consciousness about wasteand the lack of customerresponsiveness in today'stypical current state,a situation often invisible to value stream partnerslooking only at their own operations.However, if consciousness is raisedbut no future stare is achieved the whole mapping exercisejust createsmore corporatewallpaper- pure mwda. How can you actually achieve future stateswhen many departments and firms must cooperateand no one person or firm is legally "in charge"? We have already suggestedthat progressis best made in a seriesof steps beginningwith the easiest.If a Future State 1 can be achievedthat reduces time and effort within each participatingfirm, this will give all of the value stream partnersthe courageand incentive to go further. Then, if Future State 2 can be achievedas well - addressingproduction control problems to stabilize demand, remove noise,cut costs,and enhance responsiveness to the customer- the momentum for improvement will be much stronger.The prospectsfor successfulintroduction of the Ideal State, with its requirementsfor investment and relocationof activities,then become much brighter. Running the processin the oppositedirection, beginning with a big leap to an ideal state,may be possiblein some cases- particularlyfor entirely new products-

and we certainly don't want to discouragevalue streamteams in a position to make rhis leap. However, in the great bulk of instances,small stepswill be essentialat the srartro lay the groundwork for big leapslater.

PARTVII: ACHIEVINGFUTURESTATES

In our experience,Furure state 1 can be achievedin about three months after completion of the Current Stare map. F uture State Z canbe in place in six months after the achievementof Future State 1. Howeveq conditions will vary and it may be more practicalfor the value stream ream ro begin implementingFuture state 2 even if Furure state 1 is not completelyin placeand stabilized.This is becausemany of the activitiesinvolvedare quite separateand can proceedin parallel. 'I'he

timing for the ldeal State may range from "soon" (particularlyfor new products)to "much later". The team in our exampleconcludedthat

the new supplier park configurarioncan be in place in four years,at the point that the nexr generationof vehicle Models A and B with redesigned wiper sysremsis introduced. Tiying to move faster would mean that Beta and Gamma would need to continue their remote operationsfor their other customersand would incur substantialcostsfor duplicate rooling and underutilization of their existing facilities. Even if the precisetiming of the later sraresis harclto determinenow the simple act of writing down all of the necessarysteps and agreeingon specific target dates for achieving specific steps has the highly useful effect of converting vague intentions and "no year" projectsinto concrete, trackabletasks.

76

The Value Stream Plan We suggestthat the value streamteam develop a value streamplan for their product family at the end of their initial walk, when the Current State map is drawn. This exerciseshould only take a few days.If it dragson the odds are very high that nothing will ever be implemented.Just as in the caseof lean production,velocity is criticallyimportantin lean improvementactiviries. A value streamplan shows: o exactly what your team plans to accomplish,step by step . measurablegoalsfor team members o clearcheckpointswith real deadlinesand responsibleindividuals . the formula for sharingcostsand benefits among participatingfirms 'I'his

planning processwill be familiar to you if you have had experiencewith

policy deployment or if you have alreadydeveloped facility-level value stream plans of the type shown in Part Y of Learning to See(and Part VI of Creating Continwous Flow). However, it will be a bit more complicated becausethis plan builds on the "YearlyValue Stream Plan" for each facility being developed at the same time, as illustrated in Learning to See. The wiper value stream team developed a simple value stream plan, as shown on the next page.


YEARLY

?aul Doe, Beta; J oe baker, G amma: 9 ally J ones, Steel 5 up plier

Product-Family Business Objective

Value Stream Objective

GOAL (measurable)

OUAR T ER LY 2oo2

lmproveWofitability onwipersfor Alpha, Deta,Gamma,+ steel eupplier.

F91

*continuousflow wherepoeeiblein allfacilii"ies

Leadtime=23.9 days lnventnryturfls=9 Qualityecreen=2OO

*level

pull within all lacilities

*level pullbetween allfacilities

F92

*trequent repleniehment loopsbetween allfacilities

'value stream compreeeionby co-locating all ete?e adjacent to customer

Leadtime=15.8 days lnventnry turne = 14 Quality ecreen = 50 Deliveryscreen=3 Demand amplification gcreen=5

Leadtime=2.8 daye lnvenlory turns =79 Quafityscreen=2.5 DeJivery ecreen=1 Demand amplification Sareen= 1

O Start

A Completion

78

::

SIGNATURES

\ 'A L U E

STREAM

PLAN

SCHEDULE 2()()3

5mith Doe baker Jones

O On target

A

Behindtarget

Operatione ?urchaeing ?C&L Manufacturing Engineering Quality (inevery firm/facility)

o o A A

Wipersfor AlphaModelsA+b


CONCLUSION At the end of this brief breakthroughguide for achievingfuture and ideal srateswe must sharea secret:You'll never actually achieveyour ideal state! It rurns out that there is always more waste to removc and that value for the customer can alwaysbe further enhanccd. For example,wipers might some day be molded as a singlepiece in matchingbody colors, eliminatingthe need for the stamping,painting,and final assemblyof considerablenumbers of parts.If cycle times for these activitieswere at or below takt times for wipers on the final assemblyline and if changeoversfrom onc wiper color and specificationto the nexr were also (or at leastwithin takt time), it woLrldbe possibleto mold wipersto essentiallyinstantaneous line secluence with total throughputtime and value crcatingtime both shrinkingto seconds. At that point, the "Ideal State" portrayed in this workbook will appearto be full of mwdal However, there'sa companionpoint that alsoseemsto be a secretto manv managers.This is that successivefuturc statesgetting much closerto the ideal statecan be achievedby real managersin real firms building current product designs- in only a short period of rime even when there is no "value streamdictator" giving orders.And even more can be accomplished with the next generationof products,before machinesand faciliticsare locked in place. The trick is to take a walk together so everyonecan see the whole. Then estimatethe "prize" availableto the group if the whole value streamcan be optimized. Then devise a mutually acceptableway to split the loot if the current state "Bank of Muda" can be robbed. It won't happen all at oncc and you'll probably never reach that huppy land of completely frictionless cooperationbut the challengeis to get started,gain some initial successes, and not look back. As firms and departmentslearn to see togetherit should alsobe possibleto make your maps ever more inclusive,eventuallvreachingall the way from the customer'suse of the product through the life cycle back upstreamto inchoatcmatter before any processing.And wc believe it will be attractiveto map wider and wider range of goods and servicesincluding office processes,as many readershave already startedto do with the micro-mapsin Learning to See.(For example, we at LEI have alreadyheard from readersabout mapping gold mining, fish stick manufacture,postal sorting operations,insuranceclaims processing,the writing of technical manualsfor complex aerospaceproducts,and visits to the doctor.)Bccausethere is alwaysa value stream whenever there is a product (whether it's a good, a service,or some combination),we are confident that consciousness will continue to spreadabout the pcltential of value streammapping. Wc wish you the best in your endeavorsand hope to hear about your problemsand your successes.

About

the Authors

Dan Jones Dan is co-author of rhe Machine That changed the'world and Lean Thinking. He is a SeniorAdvisor to the Lean EnterpriseInstitute (LEI), and Chairman and Founder of LEI's affiliate organization,the Lean EnrerpriseAcademy in the uK (www.lean.uk.org).He has long had an interest in mapping enrire value srreamsand took the lead in developing the examplespresentedin Chapter Z of Lean Thinking. These began with the humble can of cola that requires319 days to passthrough six different companiesand nine facilities acrossthe world, firms and facilities that collectively conduct only three hours of value-creatingactivities before the cola finally reachesrhe cusromer.

Jim Womack Jim is co-author of The Machine That Changed the'World and Lean Thinking and Presidentand Founder of the Lean Enterprise Institute. He fin
82

AP P E N D IX

A - E xte n d ed

Value

Str eam

M apping

lcons

The icons and symbolsfor current and future state mapping fall into three categories: Material FIow, Information Flow, and General Icons. Material

lcons

tl |

.'--+

lhl ----+ | -

|

Represents

Notes

Process Manufacturing

One processbox equals an area of flow. All processesshould be labeled.Also used for departments, such as ProductionControl.

O u t s i d eS o u r c e s

Used to show customers,suppliers, and outsidemanufacturingprocesses.

Data Box

Used to record informationconcerning a manufacturingprocess,department, customer,etc.

Cross-Dock

|

Warehouse

ln

I

NS_

-?

P l a n eS h i p m e n t

Note frequencyof shipments.

|-lr-.---I

T r a i nS h i p m e n t


T r u c kS h i p m e n t


Inventory

C o u n ta n d t i m e s h o u l db e n o t e d .

Lvdl-J

I Mon. I

| + wed.l-l

H

n

A

3OO pieces lDay

APPENDIX

I

Material

lcons

Represents

Notes

Movement of production m a t e r i a lb y P U S H

M a t e r i a lt h a t i s p r o d u c e da n d moved forward before the next processneedsit; usuallybased on a schedule.

Movement of finished goods to the customer

M i l kR u n

o o

1

o

ooooooooo

Supermarket

A controlledinventoryof parts that is used to scheduleproduction at an upstreamprocess.

Withdrawal

P u l l o f m a t e r i a l su, s u a l l yf r o m a supermarket.

Transferof controlled quantitiesof material between processesin a "First-ln-First-Out,, sequence.

Indicatesa deviceto limit quantity and ensure FIFOflow of material between processes.Maximum quantity should be noted.

Represents

Notes

+-

ManualInformationflow

F o r e x a m p l e :p r o d u c t i o ns c h e d u l e o r s h i p p i n gs c h e d u l e .

s

ElectronicInformationflow

For example via electronicdata interchange.

Information

Describesan informationflow.

max.20 pieces

-FIFO*

Information

84

ExpeditedTransport

lcons

Information

lcons

I

t

Represents

Notes

P r o d u c t i o nK a n b a n (dottedline indicates k a n b a np a t h )

T h e " o n e - p e r - c o n t a i n e kr "a n b a n . Card or devicethat tells a process how many of what can be produced a n d g i v e s p e r m i s s i o nt o d o s o .

W i t h d r a w a lK a n b a n

Card or devicethat instructsthe material handlerto get and transfer parts (i.e.from a supermarketto the c o n s u m i n gp r o c e s s ) .

S i g n a lK a n b a n

T h e " o n e - p e r - b a t c hk" a n b a n . S i g n a l sw h e n a r e o r d e rp o i n t i s reachedand another batch needsto b e p r o d u c e d .U s e dw h e r e s u p p l y i n g processmust produce in batches b e c a u s ec h a n g e o v e r sa r e r e q u i r e d .

Kanban Post

P l a c ew h e r e k a n b a na r e c o l l e c t e d a n d h e l df o r c o n v e y a n c e .

T

t

I

t

-

,/t\\t I

I

I

lr

r

K a n b a nA r r i v i n g in Batches

Load Leveling

Tool to interceptbatchesof kanban a n d l e v e lt h e v o l u m e a n d m i x o f t h e m o v e r a p e r i o do f t i m e .

ControlCenter

Phone

Itr't., I General

lcons

Orders

Represents

Notes

Operator

Representsa person viewed from above.

APPENDIX

A

Appendix B: Alpha Motors Assernbly Gurrent State - February 2OO2

plant, west

orange,

NJ

Alpha Crosb-Dock

-F--

----> *

E|?aso.TX l92OWiperslDay \ 12bOA 6406 16WiperslTray 32O Wiperel?allet 4A 26

\ Receiving

Kitting

"'?A+ 2560 A zAOD Wipers

us 160A 808 Wipere

Wiper 5ub-aeeembly I'T-I

Alpha1ales Orderbank Dearborn.Ml

AlphaDist.. Center --)(-* .\_> * 960WiperslDay 640 A 3200

l xDay FACILIry9UMMARY

RM50 h. wt?2h. FG14h. 2Shifts

FinalAeeembly &Test

SDaye E?E=lDay Defects = 5 ppm Defeciive =1%

CIT= 60 sec. CIO= O, 29hifts

2h. 1

60 e.

12h.

2h.

1

1

1 (1)

APPENDIX

B

Appendix B : B e ta Wi p e rs Gurrent State - February

Assem bly

Plant,

Reynosa,

Mexico

20o2

Gamma Saamping Tonawanda,NY

Harlingen,TX |

@ ZOothox

I

|

I

I t,ooonau"t I 1Z?allets

ril-lDuv I

I

br-'d

v

Receiving

A=eP 25,600 A 12,8000 ?arts

4324 224b ?arts

Assemblyl

Qvt

Aseembly2

ryAsf q9r 4324 2249 Wipers

C I T= 1 9 e " " .

zN4324 2248 Wipers

ClT = 10 sec. C I O= 5 m i n . Uptime = 95% 29hifts E?E = l Day

E?E=1Day

o,zh. 48.Oh.8.2h.

aa

B.Oh.

B.Oh.

4.2h.(1os.)

4.3h.(1oe.)

3 (1)

3 (1)

Beta HQ ?roduction Control

Alpha Motors

MRP

Harlingen,TX

h I

Detroit.Ml

weetrv I

Y l92OWiperelDay zAO A 640b

4?allets A Z?alletsA FACILIry9UMMARY

RM56 h. wt?41h. FG12h. AssemblyS

Qr

ryA\il 4324 2249 Wipers

C I T= 1 O s e c . ClO =5 min.

lnspect,&Test

Q2z

2Shifts

ryAsf 640 A 3200 Wipers

SDays E?E=1Day Defects=4OOp?m Detective = 5%

CIT =20 eec.

Uptime=95% 2Shifts E?E=1Day

B.Oh.

4.2h.(1oe.) 3 (1)

1

12,Oh. 4.5h.

1

3

APPENDIX

B

Appendix B: Garnrna starnping Assembly Gurrent State - February 2OO2

plant,

Tonavvanda,

Ny

DearbornHeighte,Ml

Receiving

1tam pi ng2

"zA\+

fT]

336 coilg

25,600 A 12,800b parae CIO= th. E ? E= 1 w e e k

10m.

14d. 4.4h. (1s.)

4.6h. (1Os.)

GammaHQ. ?roduction Control

Cleveland,OH

9etaWipere Warehouse

?lant, ?roduction Control

97AM?ED?4R79 2OOlbox 1600l?allet

MRP Tonawanda.NY

2 xWeekly th i p 5 ch edule

12?allets

FACILIry9UMMARY RM336h. w t P1 1 0h . FG4Ah. SShifts SDays

Clean,?aint&Bake

25,600 A 12,800 D ?aft,e

C IT= 5 2 mi n .

Shipping

W

25,600 A 12,800B Parts ?roduclion _ 20.6 LeadTime days

E?E=1week

3

4Bh. 4.5h. (312c.e.)

Defects=2OOO?pm Defective = 6%

CIO = 3O min. Uptime= 85%

48h.

E?E=$Q2yg

?rocessing _ 3,1$j Time gec,

2

5 (1)

APPENDIX

B

Appendix G: Alpha Motors Future State - May 2OO2

Assernbly

plant, west

orange,

beta Wipers

Alpha Cross-Dock

El?aso,

Wiper 1ub-Adoembly

NJ

Alpha 9ales Order Oank

Alpha Dist,.Center

1

/r // |_LJ-_--.l t-dl-J

l xDay

%

960lday 640 A 320b

FACILITY9UMMARY

RM15 h. w t ?2 h . FG14h. 29hifts SDays

,F

E?E=lDay

Final&,eembly

60 s.

2 (1)

_F

Defects = 5 ppm Delective = 1%

IFO*

12h.

2h.

1

1

Appendix G: Beta wipers Assernbly Future State - May 2OO2

prant, Reynosa,

Mexico

Tonawanda.NY

Beta Warehouse Harlingen,TX

rNr..... 1T

V box ,.) Vt/'a

i----------------' I I I

t-

,, &the

+ J 4- -

Cell

l

Y

A9SEMDLYCELL I A9SEMFLY

-1 I lo\e I

--

ll

?tamped ?aris

= 30 sec. CIO = 5 min. =1OO% 25hifts

16h. O.1h. (3O e.)

g4

beta HQ ?roduction Control

Alpha Motorg

Harlingen,TX Detroit,Ml

beta?lant ?roduction Control

Harlingen,TX

->% toxoXl

1920tNiperelDay 12BOA 6404 16WiperslTray

D-

32O Wiperel?allet 4?allets A Z?allet'sO

RM 16 h.

wl?oh. FG12h.

Defecfts=4OO ppm

1 2h .

2

APPENDIX

C

Ap p e n d i x C : Ga mma S ta mping Asser nbly Plant Tonavvanda, NY Future State May 2OO2

GammaHQ ?roduction Control

Cleveland,OH

iw a'

t

DearbornHeights,Ml

Tonawanda,NY

9tam pingl

9t amping2

ClT - l sec. CIO = 3 min.

C I T= 1 Os e c . CIO = 3 min.

Uptime = 95% thifts =2

Uptime= 95% thifts = 2

E ? E =4 x s h i f t

E ? E =4 x s h i f t

10 m. 2h.(1s.)

96

2 h . ( 1 Oe . )

BetaWipers HQ ?roduction Control

OetaWipers Warehouse

STAM?ED?A'R15 2OOl6ox 1600l?allet, 12?allets

FACILITY9UMMARY

RM4A h. w t ?6 2 h . F G1 2 h . SShifts

Clean, ?aini &6ake

thipping

SDays 7yg=1Day Defecl,s=2OOOWm

Defective = 6%

CIT = 52 min. CIO = 5 min. Uptime = 95% Shifts = 2 E?E = shift,

Trocessing_ 2131 Time gec.

13Om.(312Oe.)

APPENDIX

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Feedback we've tried to make this workbook easyto use, wirh detaired instructions, simple illustrations,and clear examples.However, we know fiom yearsof experiencethat applying even the simplesrconcept in a complex organization is difficult. So we need your help. After you have tried implementing the techniquesdescribedin this workbook,pleasemail, fax, or email commentsto: Lean EnterpriseInstitute, one cambridge center, cambridge, MA 0zr42 usA trax:617-871-2999. Email: [email protected] Reach us ar: lean.org

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Womack - Seeing the Whole - Mapping the Extended Value Stream

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